Preamble

The House met at Half-past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

MESSAGES FROM THE KING

NATIONAL SERVICE

The VICE-CHAMBERLAIN OF THE HOUSEHOLD (Mr. POPPLEWELL) reported His Majesty's Answers to the Addresses, as follow:

I have received your Address praying that the National Service (Adaptation of Enactments) (Military and Air Forces) Order, 1949, be made in the form of the draft laid before Parliament.

I will comply with your Address.

I have received your Address praying that the National Service (Adaptation of Enactments) (Naval and Marine Forces) Order, 1949, be made in the form of the draft laid before Parliament.

I will comply with your Address.

PRIVATE BUSINESS

ROYAL ALEXANDRA AND ALBERT SCHOOL BILL [Lords]

Read the Third time, and passed, with Amendments.

ROYAL HOLLOWAY COLLEGE BILL [Lords]

As amended, considered; an Amendment made to the Bill; Bill to be read the Third time.

Oral Answers to Questions — TRADE AND COMMERCE

North America

Mr. William Shepherd: asked the President of the Board of Trade if he will give an index figure of imports and exports between Great Britain and North

America for the years 1938 and 1948 for manufactured goods only.

The President of the Board of Trade (Mr. Harold Wilson): The value of United Kingdom exports to North America in 1948 of articles wholly or mainly manufactured, expressed as an index number based on 1938 = 100 was 388. The coresponding index number for imports from North America in 1948 was 223.

Board of Trade Consultants

Mr. Sidney Shephard: asked the President of the Board of Trade how many efficiency experts are employed by his Department; what are the total salaries paid to them; what are their qualifications to advise industry; and how many business firms consulted them in 1948.

Mr. H. Wilson: Thirty-two technical officers are employed in the production efficiency service, at an approximate cost of £30,000 per annum. Their qualifications are a recognised engineering training, followed by several years of practical experience on problems associated with the efficiency of production. During 11 months ended 31st December, 1948, 208 firms consulted them, of which 84 were cases of a minor nature. Figures are not available for January, 1948.

Mr. Shephard: In view of the very small number of persons who have consulted them, would it not be better to leave this work to business consultants of whom there is an ample supply, and release these officials for industry?

Mr. Wilson: No, Sir. I am satisfied from the reports I have had from some of the firms who have called upon these consultants that they have found the service very valuable indeed.

Mr. W. Shepherd: Is it not a fact that the gentleman who was lately in charge of this section, after considerable experience, expressed a view similar to that just given by my hon. Friend the Member for Newark (Mr. Shephard)?

Mr. Ellis Smith: Can we be told whether the firms who consult these experts pay for the advice which they receive?

Mr. Wilson: In general, I think the answer is "No."

Dollar Earnings (Inventions)

Sir Wavell Wakefield: asked the President of the Board of Trade if, in order to increase dollar earnings, he has considered organising in the North American Continent through the National Research and Development Corporation or in some other appropriate way an exhibition of British inventions and patents available for exploitation by acquisition of licences; and with what result.

Mr. H. Wilson: I am prepared to consider any method by which we can increase our dollar earnings, and I have already sent this suggestion to the Dollar Export Board. But I am very doubtful whether an exhibition organised by the Government would be the best way to secure an increase in our dollar earnings from British inventions and patents. I have no doubt that British industry will take every opportunity to increase further our earnings from this source, and I am prepared to help in any way I can.

Mr. Walter Fletcher: Has the Dollar Export Board any powers to initiate suggestions, or is it only to consider suggestions put forward by the Minister?

Mr. Wilson: That is really another question, but the Board is able to take the initiative in suggestions both to the Government and to industry.

Knitwear (Utility Schedule)

Mr. Sidney Shephard: asked the President of the Board of Trade if he is aware that there is a considerable demand for ladies' knitted sleeveless pullovers and cardigans, but as these garments are not included in the specifications of his Department, they are subject to Purchase Tax; and, in view of the fact that a saving of wool would result if they were available in the utility range, if he will take steps to include them.

Mr. H. Wilson: The present utility ranges cover as much as 90 per cent. of the hosiery and knitwear industry's total output for the home market. There has been no representative request from those interested for the inclusion of these particular garments. Such a request would, of course, receive consideration.

Mr. Shephard: Is the right hon. Gentleman aware that this utility schedule

was published in 1940, is now completely out-of-date and needs a thorough overhaul? Is he further aware that his Department cannot dictate to women on the trends of fashion?

Mr. Wilson: My Department has never tried to dictate the trends of fashion to anybody. The facts are that a committee considers possible changes in the utility schedule, and that if a representative body were to take this up my Department would be prepared to consider it.

Mr. Shephard: Would the right hon. Gentleman not consider representations from separate firms? Must they be from groups of firms?

Whisky Exports

Mr. Stokes: asked the President of the Board of Trade how much whisky was exported to the United States of America during the first six months of 1949; and at how much per gallon.

Mr. H. Wilson: Figures for the export of whisky in June are not yet available, but from January to May, 1949, nearly 1,850,000 proof gallons of whisky were exported to the United States of America. The average f.o.b. price per proof gallon was 41s.

Mr. Stokes: May I ask my right hon. Friend whether he himself, quite apart from the Minister of Food and the Chancellor of the Exchequer, has examined this question and is satisfied, as a business man, that he cannot get more for whisky?

Mr. Wilson: I have examined the case myself, and we have had many discussions with the distillers, who are satisfied that to put the price any higher would only be detrimental to their long-term interests.

Mr. Emrys Hughes: What percentage of this whisky was exported from Scotland?

Raw Cotton

Mr. Sutcliffe: asked the President of the Board of Trade whether, in addition to the figures given in the Trading Accounts and Balance Sheets for 1947–48, he can provide further information as to how the profit of £28 million in connection with the purchase and supply of


cotton and ancillary materials was achieved; and whether he is satisfied that no unnecessary burden has been placed on the cotton industry of this country by extracting such a profit from these transactions.

Mr. H. Wilson: The profit in the trading year 1947–48 arose from the fact that prices of raw cotton were rising rapidly in the latter half of 1946, selling prices in this country were increased and stocks which had been acquired at lower prices were being sold or re-valued at the higher price. The answer to the second part of the hon. Member's Question is, therefore, "Yes, Sir."

Mr. Sutcliffe: Can the right hon. Gentleman say what benefit, if any, has been obtained, or will be obtained, by the cotton industry as a result?

Mr. Wilson: As the hon. Gentleman knows, it has been the policy of the Raw Cotton Commission to adjust their selling prices to the replacement value of cotton in various markets of the world, and, therefore, this capital gain will be useful in enabling them to do that.

Tariffs, United States

Mr. A. Edward Davies: asked the President of the Board of Trade how far it is estimated that American tariffs are a barrier to the importation of manufactured goods and commodities from Britain and the rest of the sterling area; and what recent steps have been taken to deal with the problem.

Mr. H. Wilson: Although substantial reductions in the United States tariffs were negotiated at Geneva in 1947 by the United Kingdom and other countries and incorporated in the General Agreement on Tariffs and Trade, the level and the administration of the United States tariffs remain an obstacle to the development of sterling exports to the United States in many classes of goods. Information has recently been given on these lines to the special group representing the European Co-operation Administration and the United States Department of Commerce which has been visiting Europe to discuss with various O.E.E.C. countries how exports to the United States can best be increased.

Mr. Edward Davies: Can the Minister tell us whether there is any prospect of reducing some of the tariffs on goods which we could provide, and whether any arrangements are being made to co-ordinate production in this country and America so that we are not competing to no purpose?

Mr. Wilson: I think it would be impossible to estimate what those prospects are.

Cinema News Reels

Mr. Eric Fletcher: asked the President of the Board of Trade when he proposes to withdraw S.R. & O., 1943, No. 430, which restricts the freedom of cinematograph exhibitors in their choice of news reels.

Mr. H. Wilson: Subject to the supply of film base, which has to be paid for with dollars, the Cinematograph Film (Control) Order, 1943, will be withdrawn as soon as it becomes unnecessary to restrict the home consumption of raw film stock in order to satisfy export demands.

Mr. Fletcher: Would the Minister consider whether, without increasing in any way the total consumption of raw stock and still restricting distributors, it would not be possible to restore freedom of choice to consumers?

Mr. Wilson: I am quite prepared to consider that, if anyone can work out a scheme which will not involve an increase in consumption of the stock.

Mr. John Foster: Would the right hon. Gentleman not consider allowing the same number of films to be produced and leaving it to the free choice of those who wish to have news reels; or, alternatively, to allow them to be able to cancel news reels and compete for what is left, since both these systems would not increase the amount of film used?

Mr. Wilson: I am quite prepared to inquire into any scheme if I can be satisfied that it will not involve an increase in the consumption of stock.

Token Imports, U.S.A.

Mr. Piratin: asked the President of the Board of Trade if he will give the total annual value of token imports from the United States of America, indicating the details; and say how these imports are allocated to British traders.

Mr. H. Wilson: For 1948, licences issued for imports from the United States under the Token Import Scheme totalled £525,142, of which the two principal items—apparel and footwear—accounted for £161,000. The Scheme covers more than 150 commodities, but if the hon. Member will let me know in which goods he is interested, I will let him have details. Each United States manufacturer is permitted by the Scheme to send 20 per cent. by value of his pre-war trade in the goods on the Token Import List. An import licence will normally be granted to any importer whose American supplier is entitled to participate in the Scheme.

Mr. Piratin: In view of this rather heavy amount of token imports—£500,000—would the Minister consider, especially at this stage, the question of ceasing these imports completely in order to save the dollars?

Mr. Wilson: No, Sir.

Mr. Piratin: Why not?

Oral Answers to Questions — ELECTORAL REGISTER

Major Vernon: asked the Secretary of State for the Home Department whether the distinction between Mrs. and Miss is to be made in the new electoral registers; and whether any other distinguishing titles will be inserted.

The Secretary of State for the Home Department (Mr. Ede): No, Sir. This would mean altering a large proportion of the existing entries in the standing type of the register, and I regret that this is not practicable at the present time, in view of the shortage of labour in the printing trade.

Major Vernon: Will the Minister consider on some future occasion introducing this arrangement, which will be of great benefit to many people?

Mr. Ede: I have the point in mind, and I will look at it, but I do not think that the difficulty is as great as is sometimes made out.

Mr. Cecil Poole: Can my right hon. Friend say how he can prevent Miss becoming Mrs.?

Mr. Ede: I have no desire to do that, in view of the Report of the Commission on Population. In my experience, and

I have had about 45 years of dealing with these registers, the best thing to do if one is in doubt is to describe the lady as Mrs.

Mr. Douglas Houghton: asked the Secretary of State for the Home Department what steps he proposes to take to encourage all men and women entitled to the vote to make sure that their names appear on the electoral lists to be published at the end of this month.

Mr. Ede: I propose to broadcast on this theme on 28th July. There will also be an official advertisement in the national Press; and I have asked registration officers to arrange all possible local publicity as well.

Colonel Gomme-Duncan: Will the right hon. Gentleman's colleague, the Secretary of State for Scotland, also broadcast on it?

Mr. Ede: No, but I will make it quite clear that my remarks apply generally to Great Britain.

Sir W. Wakefield: Can the right hon. Gentleman say whether, according to his reply, local authorities are empowered to advertise in the local Press in the same way as the right hon. Gentleman is advertising in the national Press?

Mr. Ede: I am sending a circular to the local authorities, informing them of what they can do.

Oral Answers to Questions — METROPOLITAN POLICE (PENSIONS)

Mr. Mellish: asked the Secretary of State for the Home Department if he will give the number of men now serving in the Metropolitan Police Force who joined the Force between 1st July, 1919, and 31st December, 1919, during 1920, and from 1st January to 28th August, 1921, respectively; and the numbers of these men who have now reached 55 years of age and will be retired under the age-limit rule with their pension based on their yearly pay and not subject to the three years' averaging.

Mr. Ede: The answer to the first part of the Question is 250, 327 and 103, respectively; of these men 69, 74 and 20, respectively, have now reached the age of 55; a further 258 will reach that age before 1st July, 1952. The normal age of


compulsory retirement in the Metropolitan Police is 55 except for ranks above superintendent, but men who joined the force between 1st July, 1919, and 28th August, 1921, cannot be compelled to retire until they have completed 30 years' service, and officers in this category who are above the rank of sergeant retain ages of compulsory retirement which are later than the normal age. All these officers, however, have the right to adopt the normal age of compulsory retirement if they choose, and so to have their pensions based on their actual retiring pay.

Mr. Mellish: Is my right hon. Friend aware that, on the figures he has given, it would appear that in the Metropolitan area there are approximately 147 men who have done 30 years' service, but who, by virtue of the fact that they are not 55 years of age, in order to get the maximum pension, have to serve another three years? In the light of the fact that there are only 147 and that there is some considerable hardship, may I ask my right hon. Friend to be good enough to look at this again, to see if something cannot be done for these men?

Mr. Ede: I do not think the number is as great as my hon. Friend has said, but, of course I could not do something for the Metropolitan Police and not do it for the remainder of the police forces of the country. In the light of the Oaksey Report, I think it is clear that we could not contemplate doing that at the present time.

Mrs. Braddock: Is my right hon. Friend aware that there is some confusion about the interpretation of Section 51, subsections (1) and (2) of the new police regulations, and that the Liverpool Watch Committee had to postpone a decision in two cases until they could get more information from the Department as to the meaning of the words "compulsory retirement"?

Mr. Ede: I am surprised to hear that there is any doubt as to what the words "compulsory retirement" mean. I had not heard that there was difficulty in Liverpool, but I will examine the matter.

Mr. Mellish: Would my right hon. Friend look at the matter again if the figures for the whole country prove to be quite small, because there is a hardship

here, and there was a contract for 30 years' service only?

Mr. Ede: I am always prepared to look at anything which is put before me by the Police Federation, but I am bound to consider the considerations put forward in the Oaksey Report.

Mr. Gammans: Will the right hon. Gentleman say what he means by "in the light of the Oaksey Report"? Surely it is a fact that these men, on whose behalf we are raising this matter, will not benefit in any way by the Oaksey Report if they retire now.

Mr. Ede: They would benefit very considerably by the Report if I made this concession because then they would be entitled, through having served one day after 1st July, 1949, to be pensioned on the rate of pay they drew for that one day only.

Commander Noble: Are we to understand from what the right hon. Gentleman said just now that this point was not raised by the Police Federation? There is no doubt that the men concerned feel very strongly on the point.

Mr. Ede: It was raised by the Police Federation at the Police Council, and in the end they decided that the best thing to do was to accept the Oaksey Report as a whole.

Oral Answers to Questions — COMMISSION OF THE PEACE, SWINDON

Mr. Thomas Reid: asked the Secretary of State for the Home Department in view of the representations made to him by the Swindon Town Council that this borough be not deprived of its separate Commission of the Peace, what steps he is taking in the matter.

Mr. Ede: The Justices of the Peace Bill proposes to abolish the separate Commissions of the Peace of non-county boroughs. It would not be possible, within the compass of a reply to a Parliamentary Question, to give the reasons for this proposal, but the House will have an opportunity of discussing this matter when the Bill comes to this House from another place. In the meantime, the representations made by the Swindon Town Council will receive consideration.

Mr. Reid: Is my right hon. Friend aware of the unique position of the town of Swindon, in the County of Wiltshire, in view of the fact that it is the only big industrial town in the county? It has a high standard of administration and both the council and the people of Swindon are very anxious that they should not lose their separate Commission of the Peace.

Mr. Ede: Those are arguments which can be advanced when the Bill is here, and I shall then be prepared to consider them.

Oral Answers to Questions — POLISH STOWAWAY

Major Tufton Beamish: asked the Secretary of State for the Home Department whether he intends to deport to Poland Mr. Jan Streich, at present in Brixton prison, who arrived in this country as a stowaway on a British ship from Gdynia on 7th June, in view of the fact that this gentleman was closely associated with the underground movement against the Germans during the war and that he fled his country in order to avoid arrest by the security police and that if he returns to Poland he will be treated as a political prisoner.

Mr. Ede: I am carefully considering the representations, some of which only reached me this morning, made on behalf of this stowaway, and I will communicate with the hon. and gallant, Member.

Major Beamish: Will the right hon. Gentleman bear in mind that participation in the underground movement against the Axis during the first 18 months of the war is a serious crime in the eyes of the present régime in Poland, and will he give most careful consideration to that fact before deciding to send this man back?

Mr. Ede: I am considering all the matters that have been placed before me about this case. Certain letters forwarded by the friends of this man reached me only this morning, and I want to examine them very carefully.

Mr. Sydney Silverman: Does my right hon. Friend accept the statement in the Question that the present Polish Government regard it as a serious crime to have

been associated with the underground movement against the Germans?

Mr. Ede: I do not accept any statement at its face value. I have to examine all the statements that are made in connection with these cases.

Oral Answers to Questions — RATES (ASSESSMENTS)

Sir Ian Fraser: asked the Minister of Health what instructions or guidance he has given to county councils as to the raising of assessments of property for rates.

The Minister of Health (Mr. Aneurin Bevan): The Central Valuation Committee provides the co-ordination at the centre for county valuation committees which have the duty of promoting uniformity in the principles and practice of valuation. Successive Governments have encouraged these committees in their difficult task.

Sir I. Fraser: Is the right hon. Gentleman aware that it is believed in some local authorities that instructions, or at any rate directives, have been issued indicating the method whereby certain houses are to be revalued before others? And does not he agree that if this is true its causes unfairness?

Mr. Bevan: I have not heard of it, but if the hon. Gentleman will let me have particulars I will have it examined.

Oral Answers to Questions — NATIONAL HEALTH SERVICE

Balderton Colony (Building)

Mr. Sidney Shephard: asked the Minister of Health when permission will be given to complete the building of Balderton Colony for mental defectives.

Mr. Bevan: Permission will be given as soon as the necessary supplies of labour and material permit.

Mr. Shephard: Is the right hon. Gentleman aware that this building was almost completed before the war, at great cost, and that it has been derelict now for nearly 10 years with the boiler houses flooded? Since it can accommodate about 400 patients, will he not give instructions for the work to be done immediately?

Mr. Bevan: The claims of this building are, of course, considered against the claims of other buildings, and a decision is taken on the relative merits.

South-Western Hospital, London

Lieut.-Colonel Lipton: asked the Minister of Health what decision has been taken about the proposed transfer of the South-Western Hospital, Landor Road, S.W.9, to St. Thomas's Hospital.

Mr. Bevan: I am informing the boards concerned that I am unable to agree to this transfer.

Doctors (Qualifications)

Mr. Collins: asked the Minister of Health if he will define the qualifications of a senior hospital medical officer and the minimum qualifications of a consultant under the National Health Service.

Mr. Bevan: I should not presume to do so. Each individual case needs judging on its merits by local professional committees suited to the task.

Mr. Collins: Is my right hon. Friend aware that owing to the lack of information on this subject there is a great deal of confusion and dissatisfaction? Does not he think that a statement on this particular point would be helpful to all the persons concerned with the matter?

Mr. Bevan: I cannot issue any general information on this matter. The grade to which the doctor belongs is decided by a professional committee, and I have not the least intention of interfering with that committee. They decide each case on its merits, and I can do no more than leave this matter to the members of the profession concerned.

Squadron-Leader Fleming: Can the right hon. Gentleman say whether, where the doctor has been demoted from a higher grade to a lower grade, he has a right of appeal to anybody?

Mr. Bevan: It is wrong to speak of demoting. This is the first time grading has been done; therefore, there can be no demoting from a superior to an inferior grade. There is a review of the initial decision, and arrangements have been made to establish machinery for the purpose.

Doctors' Lists

Miss Bacon: asked the Minister of Health what is his policy, in an over-doctored area, in respect of those doctors who wish to have more than 4,000 patients on their lists.

Mr. Bevan: In general, I should not give permission to exceed the normal maximum in any area where the Medical Practices Committee consider that the number of doctors was adequate.

Miss Bacon: Is my right hon. Friend aware that in one area, where the average number of patients per doctor is only a little over 2,000, a doctor has been allowed to build up a practice of 6,000 by bringing in an assistant? Is this, with his consent?

Mr. Bevan: I will certainly cause inquiries to be made into this case but, of course, where the doctor has an assistant he is able to have a larger list.

Northwich Infirmary (Furniture)

Mr. John Foster: asked the Minister of Health why a Pickford's van was sent to the Northwich Victoria Infirmary by the North and Mid-Cheshire Hospital Management Committee on 1st July, 1949, to take away, without any notification to the matron, a conference table and 25 chairs, worth about £200, the gift of Colonel Saner to the Infirmary, a desk, the gift of Mr. H. Southerton, worth £60, and a table worth £30, the gift of Miss Saner; why a bill for £6 for removing this furniture was presented to the Infirmary authorities; and whether he will instruct the Committee to return this furniture and to apologise to the donors and to the Infirmary for their action.

Mr. Bevan: This is entirely a matter for the management committee, who required the equipment at another hospital in the same group and who fully informed the donor of their intentions.

Mr. Foster: Is the Minister aware that neither Mr. Southerton nor Miss Saner was informed of this? How does he justify the rendering of a bill of £6 to the hospital, from where the furniture had been taken?

Mr. Bevan: The facts given to me conflict with the facts given to the hon. Member. Colonel Saner raised no


objection. The desk was given by Mr. Southerton and the table by Miss Saner and they are used by the same officer who used them at the Northwich Infirmary. The bill for the removal was paid by the management committee, who are making the best use of available furniture and thus avoiding unnecessary expenditure.

Mr. Foster: I asked the Minister why the bill was presented, not by whom it was paid. Did Mr. Southerton and Miss Saner agree?

Mr. Bevan: All I can say is that I will make further inquiries, but the facts given to the hon. Member disagree with the facts given to me. I should have thought, speaking generally and not about this particular incident, that it is far better that furniture should be economically used than that it should be tied up merely because it happens to be a bequest.

Hospitals (Maternity Cases)

Mr. Peter Freeman: asked the Minister of Health whether he is aware of the increased demand for maternity cases in hospital; and what steps are being taken to encourage those whose health and circumstances are adequate to have this service in their own homes and so relieve the congestion which is prevalent all over the country.

Mr. Bevan: Hospitals and local authorities are being encouraged to give priority for hospital confinement to those who need, it for medical reasons, or because home circumstances are unsatisfactory.

Hospital Notice Boards (Use)

Mr. Gammans: asked the Minister of Health if it was with his knowledge and approval that a propaganda leaflet advertising a meeting of the Socialist Medical Association on 5th July was pinned to the reception desk of the Westminster Hospital on Wednesday last, 29th June; and what instructions have been issued to hospitals regarding the use of notice boards for party political purposes.

Mr. Bevan: No, Sir. No instructions have been issued, since this is clearly a matter for hospital bodies themselves to decide.

Mr. Gammans: Does the right hon. Gentleman approve of public funds being used to put up notice boards on which a party political meeting can be advertised? If so, does it mean that any party can advertise its meetings on a hospital notice board?

Mr. Bevan: This is entirely a matter within the discretion of the management committee of the hospital itself. It is not desirable that we should always try to decide what they should do in every instance.

Appliances (Advertising)

Sir Hugh Lucas-Tooth: asked the Minister of Health whether he is aware of the practice of commercial firms advertising that their particular appliances can be obtained entirely free of charge under the National Health Service, and offering, if names and addresses are sent to them, to advise applicants of procedure; and whether he will introduce legislation to put an end to this practice.

Mr. Bevan: Action has already been taken to stop advertising in connection with hospital appliances, and similar steps are being considered to cover others supplied through the National Health Service.

Sir H. Lucas-Tooth: Would the right hon. Gentleman indicate the nature of the action, if I send him information of a recent incident?

Mr. Bevan: I should have thought the answer would be that the hospital authorities would not buy appliances from the companies which offended.

Rubery Hill Mental Hospital (Inquiry)

Mr. Blackburn: asked the Minister of Health whether he has completed his inquiry into conditions at Rubery Hill Mental Hospital; and with what result.

Mr. Bevan: Yes, Sir. As the answer is rather long I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Blackburn: In view of the fact that on the last occasion this matter was mentioned in the House a statement was made that a censure had been passed on the hospital at the inquest, will the Minister make it clear that no censure was


passed on the medical authorities of the hospital at this inquest, or in any other case?

Mr. Bevan: If the hon. Member will read the report in HANSARD he will see that those points have been covered. In view of the fact that so much public attention has been directed to this case, I thought it desirable that I should make a very full report.

Following is the answer:

The Questions in the House involved three main issues:

(a) The alleged wrongful certification of old people.
(b) The understaffing of Rubery Hill Mental Hospital.
(c) The circumstances attending the death of a patient at that hospital.

The result of the inquiries on the first point is that, as yet, not a single name has been forthcoming of any person who could be shown to have been wrongfully certified under the Lunacy Acts. The Ministry of Health deprecate the certification of old people if it can possibly be avoided and if beds are available outside mental hospitals; and recommendations have been made to the regional boards in this matter. The necessity for certification may arise in some cases because at the moment the only suitable accommodation available is in our mental hospitals; but no case has come to notice in which a person certified was not of unsound mind.

Two officers of the Ministry of Health have visited Rubery Hill Hospital and reported in detail on the nursing position. The female staff has recently increased by six, and active steps are being taken to stimulate recruitment. The inspecting officers have made some detailed recommendations which will be communicated to the management committee of the hospital. In general, they found that the staff is properly controlled, that the administration of the hospital is good, and that the staff work as a happy team.

The circumstances attending the death of a patient (Mrs. Walker) were the subject of an inquest by the coroner sitting with the jury. A verdict of "Accidental death" was returned, and the matter was dealt with in the Debate on the Adjournment of the House on 3rd June.

Sanatorium, Naylands

Commander Pursey: asked the Minister of Health (1) the date on which the ex-British Legion women's tuberculosis sanatorium at Naylands, near Colchester, was taken over under the National Health Scheme; and when it is proposed to appoint a non-British Legion hospital committee to run this hospital as a public sanatorium instead of a charitable institution and to remove the British Legion advertisements and notices;
(2) why National Health Scheme patients at the women's tuberculosis sanatorium at Naylands, near Colchester, have to make British Legion poppies and paper hats for sale; what are the rates of payment to patients; what are the profits; to what purpose have the profits been given; and what contribution has been made to the hospital funds during the last 12 months;
(3) what steps are being taken to provide women patients in the women's tuberculosis sanatorium at Naylands, near Colchester, with unchipped crockery; why patients have to buy their own cups; and when are urns to be provided to supply hot tea and other beverages, instead of the present cold supply in large chipped enamelled jugs.

Mr. Bevan: I am making inquiries, and will write to my hon. and gallant Friend.

Lieut.-Colonel Sir Thomas Moore: Is there not something odd about this matter? Why should a "non-British" committee be appointed to run a British hospital? Would the Minister answer that?

Mr. Bevan: Perhaps the hon. and gallant Member will await my inquiries.

Hospital Patients (Free Clothing)

Mr. Haydn Davies: asked the Minister of Health to what extent it is his practice to provide free clothes for hospital patients.

Mr. Bevan: I shall be glad to clear up the many gross misrepresentations on this. I have told hospitals, in effect, to go on doing what was already proper hospital practice before the Health Service—that is, to lend clothing to patients who cannot provide it for themselves or


get it from any other agency, and to let them keep it on discharge when inquiries make it clear that they cannot otherwise get it. It will normally only arise, as in the past, for long-stay ambulant patients without resources.

Mr. Davies: In view of the fact that there were certain alarming stories in the newspapers about the Minister going into the tailoring business in a big way, could he tell us what steps he proposes to take to ensure that hospital authorities know the answer he has just given me?

Mr. Bevan: I hope that hospital authorities themselves will be made aware in the normal way of the answer that I have given to the Question. But I do most sincerely deprecate the grave misrepresentations that certain newspapers—two of them in particular—have been guilty of in this matter. [HON. MEMBERS: "Names."] The two newspapers are the "Graphic" and the "Evening Standard."

Mr. Marlowe: Was this gross misrepresentation made by "the most prostituted Press in the world" or the Press which is "inferior to none"?

Mr. Bevan: No. It was made by the two newspapers which have competed for the lowest position in the British Press—the "Evening Standard" and the "Graphic."

Oral Answers to Questions — THAMES TUGS (SMOKE)

Mrs. Castle: asked the Minister of Health whether he is aware of the serious pollution of the atmosphere caused by certain tugs on the River Thames; and what steps he proposes to take to check this menace to amenity and health.

Mr. Bevan: I understand that the emission of smoke from the tugs is aggravated by the lack of Welsh steam coal, which the owners prefer. At present it is not possible to provide it because of the needs of the export market. My right hon. Friend the Minister of Fuel and Power will gladly arrange for an investigation to be made by an expert of his Department to see what can be done to mitigate any cause of complaint.

Mrs. Castle: Will my right hon. Friend keep this matter under urgent review in view of the damage being done by these

black belchings both to the beauty of the River Thames and to the cleanliness of hon. Members of this House?

Mr. Bevan: I have had an opportunity of seeing these belchings, and I quite agree with my hon. Friend that they are unsightly, distasteful, and do not ease the problems of personal cleanliness.

Vice-Admiral Taylor: Does not the right hon. Gentleman agree that this excessive smoke is a direct result of the bad quality of coal?

Oral Answers to Questions — HOUSING

Site Works, Leicester

Mr. Donovan: asked the Minister of Health whether he is satisfied that site works at Thurnby Lodge, Evington House and Goodwood Estate, at Leicester, will be completed in time to prevent a temporary cessation of the Leicester Corporation's housing programme.

Mr. Bevan: Yes, Sir.

Rest Centres, London

Captain Field: asked the Minister of Health how many families were living in rest centres administered by the London County Council on the latest date for which figures are available.

Mr. Bevan: On Saturday, 9th July, 502 families were in the rest centres.

Captain Field: asked the Minister of Health what is the average length of stay of families in the rest centres administered by the London County Council; and how many of the families now living in the rest centres have been there for six months, one year and two years, respectively.

Mr. Bevan: The average length of stay is, approximately, 30 weeks; on 30th June, 228 families had been in the rest centres six months or longer; 86 families one year or longer, and six families two years or longer.

Captain Field: Is my right hon. Friend aware that these rest centres were intended only for short-term residence? Is he also aware that many families now residing in them feel that they are being overlooked by the local authorities who arranged their admittance? Will he look into the matter?

Mr. Bevan: I will certainly look into it, but I would also ask my hon. and gallant Friend and the House to consider the difficulties with which London housing authorities are faced as a consequence of the fact that people are still coming to London in much larger numbers than the capital can assimilate.

Mr. Piratin: Has not a family which has been there for over two years the right to the very highest priority? Surely they can be rehoused?

Mr. Bevan: Priority for families for housing is a matter to be decided by the local authorities concerned; I think the best the House can do is to leave it to the local authorities.

Oral Answers to Questions — WATER STORAGE

Brigadier Medlicott: asked the Minister of Health if he is aware that the total reservoir accommodation in the country is insufficient, having regard to the rising population; and what plans he has in mind for a substantial increase in the total water storage capacity, with a view to avoiding the cuts in the supply of water which now take place after a relatively short period of drought.

Mr. Bevan: The primary responsibility for seeing that their areas are adequately supplied rests with the water undertakers, and I am always ready to consider proposals from them for needed new supplies. Speed of progress, however, is necessarily governed by the amount of materials it is possible to allocate to this service having regard to other urgent demands.

Brigadier Medlicott: Having regard to the fact that quite a heavy amount of rain falls during the year, would the Minister agree that the ultimate objective ought to be to raise the storage capacity, so that we can go through the longest dry summer without anxiety?

Mr. Bevan: The House and the nation will have to consider whether it is prepared to tie up a vast amount of capital for reservoirs all over the country in order to deal with incidental and even evanescent dry weather. It is really a question of to what we ought to devote our capital resources.

Oral Answers to Questions — AGRICULTURE

Fowl Pest

Mr. John Morrison: asked the Minister of Agriculture how many outbreaks of fowl pest have been reported in each of the first six months of this year.

The Minister of Agriculture (Mr. Thomas Williams): There were 45 outbreaks in January, 42 in February, 36 in March, 39 in April, 52 in May and 71 in June this year.

Open-cast Mining (Restored Sites)

Lieut.-Colonel Corbett: asked the Minister of Agriculture what crops have been grown on restored open-cast coal sites.

Mr. T. Williams: The usual procedure in restoring land after open-cast coal working is first of all to seed it to grass so as to develop a pasture that can be grazed. In the last two years, however, a considerable area in the West Riding of Yorkshire has been successfully sown with cereals—wheat, barley, oats, and rye—as a first crop, and small areas have been planted with mustard and potatoes respectively.

Lieut.-Colonel Corbett: Will the Minister say what sort of yields have been received for cereal crops, and whether any experiments in the planting of trees have been carried out?

Mr. Williams: I could not tell the hon. and gallant Member, without notice, what kind of seed is sown, but if he is interested I will gladly let him know.

Lieut.-Colonel Corbett: I said, "yield," not "seed."

Mr. Williams: The yields were reasonably satisfactory in all the circumstances; similar investigations are being carried on.

Lieut.-Colonel Corbett: asked the Minister of Agriculture whether he is satisfied with the degree of fertility achieved after restoration of open-cast coal sites.

Mr. T. Williams: The conditions which govern the recovery of the disturbed land vary from site to site, and the methods adopted have also been varied from time to time in the light of experience. Some


sites have consequently made better progress than others. I shall not be content until fully satisfactory results are obtained on all sites, but I think that the procedure which is now adopted is, on the whole, proving successful in restoring land to effective agricultural use.

Lieut.-Colonel Corbett: There may be instances where successful restoration has been carried out, but would the right hon. Gentleman endeavour to stop all opencast mining where it has been found impossible successfully to achieve restoration owing to the heavy nature of the soil, or the fact that the subsoil drainage has been found to have been destroyed after open-cast mining has been carried out?

Mr. Williams: I can assure the hon. and gallant Member that no site is taken over until full consideration has been given to all the relevant factors.

Captain Crookshank: As the right hon. Gentleman qualified his reply by the the words "differences from time to time and site to site," is he satisfied, generally speaking, that agricultural production is not being hindered by this process?

Mr. Williams: I did not suggest anything of the kind. What I suggested was that originally, when sites were being restored, the policy was to sow the land down to grass, but more recently experiments have been made by sowing cereals of various kinds. On the whole the experiments have been not unsuccessful.

Mr. W. R. Williams: On a point of Order. Would it be possible for the amplifying system to be examined, Mr. Speaker, because it seems to be working very unsatisfactorily in this part of the House?

Deer, Cannock Chase

Mr. Anthony Greenwood: asked the Minister of Agriculture for what purpose the Forestry Commission is exterminating male deer in Cannock Chase; and if he will consult with the Lord President of the Council with a view to their preservation, by the Nature Conservancy.

Mr. T. Williams: The Forestry Commission is not exterminating male deer in Canock Chase, and I do not think the suggested consultation would serve any useful purpose.

Mr. Greenwood: While thanking my right hon. Friend for that very welcome reply, may I ask him to investigate the statement attributed to the local officer of the Forestry Commission in May, that he had given an order that every buck was to be shot at short notice?

Mr. Williams: I am not aware of that, but I can assure him that in no case are deer shot by Forestry Commission officers outside their forests, and inside their forests it is done only if the deer become a danger to trees recently planted.

Drainage, East Yorkshire

Mr. Odey: asked the Minister of Agriculture what steps he is prepared to take to prevent the silting up of Hedon Haven, East Yorkshire, which is stopping the escape of water from Burstwick Drain and, in wet weather, threatens an extensive area of land with flooding, with detrimental effects on food production.

Mr. T. Williams: Responsibility for providing an adequate outfall for the Burstwick Drain rests with the Keying-ham Level Drainage Commissioners, who have so far been unable to reach agreement with railway interests for improving Hedon Haven and maintaining it in an improved condition. My Department have no powers to undertake works in connection with the Haven, but they will use their good offices with the parties concerned to try to secure a settlement of this long-standing problem.

Mr. Odey: In view of the fact that this discussion has been going on with the Railway Executive for a number of years, will the right hon. Gentleman take steps to see that there is speedy action to end this danger, which otherwise, quite obviously, will have a detrimental effect on food production?

Mr. Williams: As I have already said, my Department uses their good offices with the Commission, and the Commissioners already know that once a suitable scheme is provided a 50 per cent. grant will be available.

Potatoes

Major Legge-Bourke: asked the Minister of Agriculture what he now estimates is likely to be the average yield per acre of this year's potato crop.

Mr. T. Williams: On the basis of crop conditions at the end of June the yield of early and main crop potatoes taken together in England and Wales was expected to be slightly under the 10 years' average of seven tons per acre.

Major Legge-Bourke: Does the right hon. Gentleman not realise that the areas that are usually expected to produce the highest yields will be lucky if, in fact, they attain only the average yield of seven tons an acre? Will that not considerably reduce the overall yield for the country as a whole? What does the right hon. Gentleman intend to do to rectify that?

Mr. Williams: What does the hon. and gallant Gentleman expect me to do—increase the yield personally?

Oral Answers to Questions — NATIONAL FINANCE

Unpaid Services (Expenses)

Mr. Erroll: asked the Chancellor of the Exchequer to what extent he permits the expenses incurred by private individuals performing unpaid services for the Government to be allowed, for taxation purposes, as an expense in any business with which the individual may be connected.

The Financial Secretary to the Treasury (Mr. Glenvil Hall): In computing the profits of a business for Income Tax purposes, no sum is permitted to be deducted which is not wholly and exclusively expended for the purposes of the business.

Money Rates (Level)

Colonel J. R. H. Hutchison: asked the Chancellor of the Exchequer whether he will now consider allowing money rates to find their true level, thereby encouraging saving and discouraging the liquidation of capital.

Mr. Glenvil Hall: Decisions about the level of money rates involve a number of different factors which cannot be discussed by Question and answer.

Colonel Hutchison: I realise that, but does the right hon. Gentleman agree that there is no real incentive to save when deposit rates are pegged to ½ per cent. permanently?

Mr. Glenvil Hall: I have said we cannot discuss this adequately by Question and answer.

Hire Purchase (Nationalised Industries)

Mr. Erroll: asked the Chancellor of the Exchequer what limitations he is imposing on the nationalised industries for the raising of new capital for the hire purchase agreements initiated by those boards.

Mr. Glenvil Hall: I would refer the hon. Member to paragraph 11 of the Memorandum of Guidance to the Capital Issues Committee of May, 1945 (Cmd. 6645). Similar considerations would apply to public boards as to other undertakings. No public board has been authorised to borrow money by issue of stock for the purposes mentioned.

Mr. Erroll: As the Chancellor has made a more recent statement than that referred to by the Financial Secretary, can the right hon. Gentleman say whether the remarks of the Chancellor—to the effect that private industry is to be restricted in regard to hire purchase agreements—apply now? Will he say whether the nationalised boards are similarly restricted?

Mr. Glenvil Hall: I have said so. Nationalised boards and private industry are on exactly the same footing in this matter.

Gold Figures (Publication)

Colonel Crosthwaite-Eyre: asked the Chancellor of the Exchequer if His Majesty's Government will resume the practice of publishing monthly gold figures.

The Economic Secretary to the Treasury (Mr. Douglas Jay): No, Sir.

Colonel Crosthwaite-Eyre: Would the hon. Gentleman have this information published, particularly as it would keep the subject very much before the public, which would be of advantage to all concerned.

Mr. Jay: As the hon. and gallant Gentleman will remember, we did try the experiment of monthly publication, and found that exceptional payments led to a result in which the monthly figures


were really misleading. It is a much more fair way of giving the information to the public to spread it over three months.

Mr. Stokes: Was not this information, or this kind of information, given before the war? If that is so, what is the necessity for secrecy now?

Mr. Jay: Whatever was done before the war, we think the least misleading way of giving this information now is, as I say, to spread it out over a period of not more than three months.

Mr. Stokes: Does my hon. Friend agree that the whole basis of gold is entirely misleading?

Mr. Godfrey Nicholson: Would it not be possible to resume the monthly statements, calling attention to any exceptional circumstances that occur?

Mr. Jay: I have already said that, on the whole, we do not think it would be wise to do so.

Sterling Area Pool

Colonel Crosthwaite-Eyre: asked the Chancellor of the Exchequer what percentage of current earnings by members of the sterling area of gold and hard currency, is placed at the disposal of the sterling area pool.

Mr. Jay: As the hon. and gallant Member is aware the sterling area is based on the principle that all members pool their gold and dollar earnings, and draw from the pool to meet their requirements. In some cases, it may be convenient for a small proportion of the earnings to be withheld. But this proportion is negligible, and the practice does not infringe the principle I have mentioned.

Colonel Crosthwaite-Eyre: Is it not a fact that with a certain number of members of the sterling area the Government have entered into contracts that they may retain current earnings of gold and hard currency for their own use?

Mr. Jay: No, Sir. The sterling area has never been a rigid, uniform arrangement. It has always been found convenient for small working balances of this kind to be retained. There are no arrangements of that kind which affect large proportions of dollars and gold.

Mr. W. Fletcher: Would the hon. Gentleman agree that this system is already causing great upset, in that Malaya, which is concerned with dollars, and whose dollars are being retained here, is already asking for special treatment at the expense of the rest of the sterling area, which is a sign of the great stress created by the system?

Mr. Jay: I quite agree that if we departed from the present general principle there would be dislocation of the whole basis of the working of the sterling area.

Colonel Crosthwaite-Eyre: asked the Chancellor of the Exchequer if he will publish at regular intervals a statement showing the total amount of gold and hard currency expended by each member of the sterling area; such statement to include for each country concerned current earnings and sums released to them by the sterling area pool.

Mr. Jay: As my right hon. and learned Friend stated in answer to a similar Question of the hon. and gallant Member on 30th April, 1948, he is not prepared to give information of this nature about individual sterling area countries.

Colonel Crosthwaite-Eyre: Even if he is not prepared to do that, can the hon. Gentleman say that he or his Department have it, so that, in fact, the Government can see an equal strain is taken by all members of the sterling area?

Mr. Jay: Yes, certainly we have the information, and we do seek to ensure that things work out in the way the hon. and gallant Gentleman suggests.

Gold Price

Mr. Stokes: asked the Chancellor of the Exchequer under which clause of the International Monetary Fund it is laid down that the United States Treasury fixes the selling price of gold.

Mr. Jay: The price of gold in the United States is determined by the gold content or par value of the dollar which is fixed by United States law. Under Article IV of the Fund's Articles, the par value cannot be altered except after consultation with the Fund.

Mr. Stokes: Yes, but that is not the Question I asked. I asked the Chancellor


of the Exchequer if he would say who fixes the price of gold. He said it was the United States Treasury, under the International Monetary Fund. I have searched the International Monetary Fund rules, and I cannot find under which rule this is done. Now I am asking the Economic Secretary if he will tell me.

Mr. Jay: If my hon. Friend is asking who fixes the American price of gold, then I must say I do not think that it is strictly the responsibility of His Majesty's Government to answer. As a matter of fact, however, it is the United States Government who do so.

Mr. Stokes: I asked under what rule of the International Monetary Fund is it laid down that the United States Treasury fixes the price of gold, and I have had no answer.

Mr. Jay: It is by the Gold Reserves Act, 1934, of the United States of America that the United States Government, with the consent of Congress, fix the monetary price of gold. By agreement, at the time of the setting up of the International Monetary Fund, the United States Government also undertook not to alter the price without consulting the Fund. I hope my hon. Friend is satisfied with that.

Mr. Stokes: Does my hon. Friend mean that the United States agree not to alter it without consulting themselves? That is all it really amounts to.

Mr. Jay: I said "without consulting the Fund."

Oral Answers to Questions — STATUTORY INSTRUMENTS

Sir John Mellor: asked the Financial Secretary to the Treasury how many Statutory Instruments were published by His Majesty's Stationery Office during the first six months of 1949; how many expired; and how many were revoked during this period.

Mr. Glenvil Hall: Eight hundred and twenty-two Instruments were published; 632 Instruments and Rules and Orders revoked; and 65 Instruments and Rules and Orders expired.

Oral Answers to Questions — RIVER TRENT (POLLUTION)

Mr. Harrison: asked the Minister of Health if he proposes to take the necessary steps to prevent the continuing pollution of the River Trent by excessive pollution coming from the Derwent; and if he is aware that the present low water has revealed the extent of the pollution by the presence of thousands of dead fish and the stench of the water, which constitutes a menace to the health of the districts on the lower Trent banks.

Mr. Bevan: I understand that the conditions referred to may be due to the prolonged hot weather rather than to pollution of the river. I am, however, making further inquiries and will communicate with my hon. Friend.

Mr. Harrison: In making these further inquiries will my right hon. Friend take into consideration that many rivers meet in the Nottingham district, and that this is the only river that causes pollution to the extent of thousands of fish being killed?

Mr. Bevan: I will make inquiries into that.

Oral Answers to Questions — DISABLED CIVILIANS (MOTOR CARS)

Mr. Lipson: asked the Minister of Health if he will extend the scheme under which motor cars are provided for disabled ex-Service men so as to make it apply to men disabled in industry.

Mr. Bevan: Motor propelled tricycles are provided for severely disabled civilians under the National Health Service, but I cannot undertake to provide motor cars at present.

Mr. Lipson: Will the Minister keep this under consideration, in view of the fact that the scheme for ex-Service men is a great boon to them which is widely appreciated, and would be of equal service to disabled men in industry?

Mr. Bevan: I will certainly keep the matter in mind, but I think it is undesirable to extend the service at the moment.

Mr. Gallacher: Would the Minister give special attention to miners who have their backs broken while at work, who need continual attention when they


are taken out, and for whom it would be very desirable to have a small car to go out in with their wives?

Mr. Bevan: This is not quite the same matter.

Oral Answers to Questions — STRIKE, LONDON DOCKS

Mr. Thomas Braddock: asked the Minister of Labour if the London Dock employers reported, as required in Order S.R. & O., 1940, No. 1305, that a trade dispute existed or was apprehended, either before or after they refused on 24th June to engage stevedore labour on newly arrived ships.

The Parliamentary Secretary to the Ministry of Labour (Mr. Ness Edwards): I would refer my hon. Friend to the answer given him by my right hon. and learned Friend the Attorney-General in the Debate yesterday.

Mr. Braddock: Is the Minister not aware that that answer was quite unsatisfactory; and that apparently it would lead the House to believe that all the possibilities of settling this dispute by negotiation were not taken advantage of by the employers before they took the disastrous action they did take, and which precipitated the unfortunate situation which exists?

Mr. Ness Edwards: I do not accept the view expressed by my hon. Friend. All the information he asks for in his Question was given to him yesterday.

Oral Answers to Questions — CONTROL OF ENGAGEMENT ORDER

Sir J. Mellor: asked the Minister of Labour why 31st May, 1949, was selected as the date upon which the emergency that was the occasion of the passing of the Control of Employment Act, 1939, came to an end, having regard to the continuance in force of the Control of Engagement Order beyond that date.

Mr. Ness Edwards: The Control of Employment Act, 1939, was an early war-time Act. It was terminated in May, 1949, as part of the programme for bringing to an end war legislation no longer needed. It has no connection with

the Control of Engagement Order at present in force, which was made by virtue of the Supplies and Services (Transitional Powers) Act, 1945, as extended by the Supplies and Services (Extended Purposes) Act, 1947, to deal with the economic difficulties arising after the war.

Sir J. Mellor: I am, of course, aware that the order was not laid under this Act, but will the right hon. Gentleman say how the emergency came to an end for the purposes of the Act and not for the purposes of the order?

Mr. Ness Edwards: That order contained certain provisions which are not contained in the present Control of Engagement Order. It was necessary to let that go because the penal powers could not be derived under the old wartime legislation.

Oral Answers to Questions — UNIVERSITY AWARDS

Mr. H. D. Hughes: asked the Minister of Education (1) the approximate number of university awards by local education authorities at the latest available date; and what steps he is taking to induce authorities to adopt the proposals of the Report of the Working Party on University Awards and increase the number of awards;
(2) what steps he is contemplating to induce local education authorities to carry out the recommendations of Chapter IV of the Report of the Working Party on University Awards.

The Minister of Education (Mr. Tomlinson): The latest figures available are for 1947–48. In that year local education authorities made 4,418 new awards tenable at universities and university colleges, and the total number of local awards current was 12,138. My officers are at present discussing the procedure for local awards with representatives of local education authorities and universities. I hope shortly to communicate the results of these discussions to local education authorities, together with particulars of the new rates of grants for state scholars. I have every confidence that local authorities will then review their arrangements as regards procedure, number of awards and rates of grant.

Mr. H. D. Hughes: asked the Minister of Education the approximate number of open university awards by universities and colleges at the latest available date; and what steps are being taken to increase the number as contemplated by the Working Party on University Awards.

Mr. Tomlinson: I have no complete information as to the number of open university awards, but the total number of students holding supplemental awards during the current academic year is 1,726. There are also a number of deferred awards for students who are doing their National Service. I understand that universities are exploring possible sources of additional income to increase the number of awards supplemented by my Department, but it is too early to say how far their efforts will be successful.

Oral Answers to Questions — METAL STOCKS (PRICES)

Sir J. Mellor: asked the Minister of Supply what will be the estimated loss upon his stocks of copper, lead and zinc acquired before 12th July, 1949.

The Joint Parliamentary Secretary to the Ministry of Supply (Mr. John Freeman): It would be premature to give any estimate at this stage, since the figure will depend on the prices at which stocks are eventually realised.

Sir J. Mellor: Is the Parliamentary Secretary aware that that would be a fair answer if the Minister had agreed to reopen the Metal Exchange and permit a free market?

Mr. Freeman: No, Sir. I do not admit that that supplementary has got anything to do with the Question. The answer I have given is a perfectly fair one to the Question put down.

Colonel Haughton: Will the Parliamentary Secretary say on what date the Ministry propose to take stock?

Mr. Freeman: There is no question of taking stock. Obviously, the stocks are perfectly well known. The figure the hon. Baronet is trying to get cannot be determined in advance. In fact the prices of two of these non-ferrous metals have changed in the last two days, since the major revision which my right hon. Friend announced.

Mr. Churchill: Is it not very important that the House and the country should have in their possession the true figures of the very heavy losses made by the State-management of these purchasing affairs, and the consequent burden and handicap imposed upon our export trade thereby?

Mr. Freeman: The "very heavy losses" that have been made to date on these metals amount to a profit of about £6 million.

Mr. Churchill: Then why did the Minister not say that before? If it had been to his detriment he would have concealed it.

Sir Frank Sanderson: Will the Minister give the House an assurance that he will enter into no long-term contracts for any type of metal or other commodity which does not include a break clause?

Mr. Freeman: That is a totally different question.

Oral Answers to Questions — PARLIAMENT SQUARE (PLANS)

Mr. Skeffington-Lodge: asked the Minister of Works if he will now make available the plans for the improvements to Parliament Square.

The Minister of Works (Mr. Key): Drawings of the proposed design for Parliament Square are now available for inspection in the Commonwealth Parliamentary Association's room. The model in that room showing the new Colonial Office building also shows the proposed improvements in Parliament Square. The plan is still tentative and discussions are proceeding on points of detail. As work must be started at an early date, if it is to be completed by 1951, I think it advisable to exhibit the proposed design now rather than wait for the completion of all outstanding questions. The resiting of the statues can be settled later, when the main outlines of the plan have been approved.

Major Beamish: Is the Minister aware that the only improvement to Parliament Square which really matters will follow automatically from the General Election, when we shall get rid of this shocking Government?

BUSINESS OF THE HOUSE

Mr. Eden: May I ask the Leader of the House to state the Business for next week?

The Lord President of the Council (Mr. Herbert Morrison): The Business for next week will be as follows:

Monday, 18th July—Conclusion of the Debate on the Economic Situation, which will arise on the Motion for the Adjournment of the House;

Committee stage of the Patents and Designs [Money] (No. 2) Resolution;

Second Reading of the Isle of Man (Customs) Bill;

Report stage of the Navy, Army and Air Force Expenditure, 1947–48.

Tuesday, 19th July—Report and Third Reading of the National Parks and Access to the Countryside Bill.

Wednesday, 20th July—Supply (23rd allotted Day); Committee, Debate on Colonial Affairs;

Consideration of Amendments to the Housing Bill, which are expected to be received from another place today;

Consideration of Motion to approve the draft National Health Service (Superannuation) (Amendment) Regulations.

Thursday, 21st July—Supply (24th allotted Day); Committee.

Debate on a subject to be arranged after discussion through the usual channels.

Consideration of Motions to approve the Crop Acreage Payments Orders for England and Wales, Scotland and Northern Ireland.

Friday, 22nd July—Committee and remaining stages of the Isle of Man (Customs) Bill;

Report and Third Reading of the Patents and Designs Bill [Lords.]

During the week we shall ask the House to take the Report and Third Reading of the Airways Corporations Bill, if it is not obtained tomorrow.

A Bill will be presented, probably tomorrow, and made available to Members to amend the National Insurance Act, 1946, to permit contributions credited, as distinct from contributions paid, since 5th July, 1948, to rank as qualification for the death grant. We hope that it will

be agreeable to the House to pass this Bill through all its stages during the course of next week.

Mr. Haydn Davies: Why is it that we are not to have a Debate on the Report of the Royal Commission on the Press next week? A fortnight ago the Opposition were demanding a Debate as a matter of urgency, and offered one of their Supply Days. Last week, I asked my right hon. Friend to give a day of Government's time in view of the Opposition's reluctance to press this matter. Am I to understand—

Mr. Speaker: This is a speech, not a question.

Mr. Davies: The question is: have the Opposition run away from their offer of a Supply Day, and, if they have, will my right hon. Friend give a Government day for a Debate, because we want it?

Mr. Morrison: I am beginning to share my hon. Friend's disappointment in this matter, because we were not only promised but threatened with a Debate, which, as I said at the time, I was very anxious we should have. Unhappily, I cannot give a day. The Opposition announced through the Deputy Leader of the Opposition, that they would devote a Supply Day to the subject; but there is a further week to go, and therefore it may be that it is still the intention of the Opposition that the Debate shall take place.

Mr. Eden: I must say that I think this is most ungracious behaviour by the Leader of the House. May I ask him to bear in mind that we have given up one of our Supply Days to allow a Debate to take place on this crisis, which we were assured by the Government, a few months ago, would not take place? We have given up a day which could perfectly well have been taken for a Debate on the Press. We have also given up one of our normal days for the Appropriation Bill in order to help the Government. That is two days given up, and all we get is an insult.

Mr. Morrison: I think that indignation is a bit out of proportion. The Government have given a day for the economic crisis as well, namely, next Monday. [HON. MEMBERS: "Oh."] I hope the


Opposition will not lose their heads. The Opposition, through their Deputy Leader, not only said they would give us a Supply Day but almost imposed and threatened us with a Supply Day in order to debate the Report of the Royal Commission on the Press. Therefore, I think it is legitimate for my hon. Friend to exercise some curiosity about the matter.

Mr. Eden: May I be allowed to remind the right hon. Gentleman that I never said we would not have this Debate before the end of the Session? I only responded to the imputation that we had behaved badly in this matter. I now give the right hon. Gentleman notice that we will have the Debate on the day of the Appropriation Bill.

Mr. Gallacher: In view of the right hon. Gentleman's statement that the Business for Thursday will be decided through the usual channels, may I ask him to consider inviting the representatives of the Communist Party and the Independent Labour group to participate in these discussions?

Mr. Morrison: I am very doubtful whether either of them is a channel, or usual, or useful.

Mr. Henry Strauss: When the right hon. Gentleman said that the Government could not give a day for discussion of the Press Report, can he inform the House what, if anything, he meant?

Mr. Emrys Hughes: Is the right hon. Gentleman aware that yesterday a day was "pinched" from Scotland, and that as a result the Criminal Justice (Scotland) Bill was indefinitely postponed?

Mr. Morrison: I am not quite sure, but we shall do our best to take care of it.

Mr. Michael Foot: Are we to understand from the exchange which has taken place about the Report of the Royal Commission on the Press that the Debate will take place in the Opposition's time, next Thursday? Is it not a fact that this delay has been a great advantage in the sense that it has given the Opposition time to read the Report?

Mr. Charles Smith: Can the Lord President indicate whether there is any

possibility, before the Recess, of a discussion on the Motion standing in my name and that of my hon. Friend on the recommendations of the Masterman Committee on the political activities of civil servants?

[That this House, while welcoming the action of the Government in accepting those recommendations of the Masterman Committee on the Political Activities of Civil Servants which expand the freedom of the minor and manipulative grades and of industrial civil servants, regrets the acceptance of those recommendations which take away much civil liberty that custom and departmental rules have given in the past to the remaining grades in the service; and urges the reconsideration, in consultation with the staff side of the National Whitley Council, of the extent to which concessions recommended by the committee for the minor and manipulative grades may be extended in the service.]

Mr. Morrison: I do not think there will be time for that. In any case, if there is to be a discussion I think it would be better if the matter were taken up by the staff side of the Whitley Council with the Treasury.

Mr. Anthony Greenwood: In view of the uncertainty which has been caused by the decision to wind up the Local Government Boundary Commission, will my right hon. Friend try to find time for a discussion on local government before the House rises?

Mr. Morrison: I do not think that is at all likely before the House rises, but there is to be a Bill on the matter, which will provide occasion for a Debate, although I do not think it can come up until after the Summer Recess.

Mr. Platts-Mills: Since the right hon. Gentleman invited me and my hon. Friends to show him our usefulness, may I draw his attention to the Motion on the Order Paper in relation to the railwaymen's pay claim?
[That this House, recognising the justice of the railwaymen's claim for an increase of 10s. per week, calls upon the Government to introduce legislation to reduce the compensation payable to former railway shareholders so as to make it easier for the Railway Executive to grant this claim.]
Although we are all delighted that the railwaymen's problems are not on the front pages of the Press, I beg the Lord President to remember that they are still vital, and likely to be back again on the front pages of the papers. May we have a Debate on this matter before a demand for further emergency regulations arises?

Mr. Morrison: I understand that this has been referred to an appropriate body for discussion. I think that on the whole it had better be left to the usual channels of trade union negotiations, rather than have hon. Members with considerable legal qualifications, barging in on the matter.

Ordered:
That this day Business other than the Business of Supply may be taken before Ten o'clock."—[The Prime Minister.]

Orders of the Day — SUPPLY

[22ND ALLOTTED DAY]

Considered in Committee.

[Major MILNER in the Chair]

Orders of the Day — CIVIL ESTIMATES 1949–50.

Motion made, and Question proposed,
That a sum, not exceeding £2,289,926, be granted to His Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1950, for the salaries and other expenses in the Department of His Majesty's Treasury and subordinate departments, including additional salary payable to the Chancellor of the Duchy of Lancaster."—[Mr. Glenvil Hall.]—[£1,000,000 has been voted on account.]

Committee report Progress and ask leave to sit again.—[Mr. Whiteley.]

Committee to sit again Tomorrow.

Orders of the Day — ECONOMIC SITUATION

[FIRST DAY'S DEBATE]

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Whiteley.]

3.41 p.m.

The Chancellor of the Exchequer (Sir Stafford Cripps): I am this afternoon privileged in a way that I believe none of my predecessors has ever been, for there are amongst my audience six other Finance Ministers from the Commonwealth as well as the heads of two other Commonwealth delegations. I am sure the House would desire me to express to them our appreciation and our pleasure that they are able to attend this Sitting. It was just over a week ago that I announced the state of our dollar unbalance was such that we had already been obliged to take certain steps for a stand-still in new purchases from the dollar area, and that we were about to have a series of consultations, after which we should be able to announce some further steps that we should be taking.
We have since then had a busy week, and after a most fruitful discussion with Mr. Snyder and Mr. Abbott at the end of last week, the result of which was reported in the subsequent communiqué, we started yesterday upon the Conference of Commonwealth Finance Ministers. It is in the light of those events that I am today able to give the House some more details as to our plans. We can also with the passage of a further week see the picture of the last three months in somewhat clearer detail.
I should like to start, therefore, with a factual, objective examination of our position as at the end of the second quarter of the year. The figures for the first quarter of 1949, as the House will remember, repeated the experience of the latter part of 1948 in that we had attained an approximate overall balance of trade, and the dollar deficiency had been reduced to proportions which were manageable with the help of E.R.P. and the Canadian Loan. Though there were already signs, which had been slowly developing in certain parts of the world, of a fall in demand and in the level of activity, we ourselves were, in fact, still experiencing the continuance of those recovery trends, which caused some satisfaction to our friends and ourselves in 1948.
In the realm of physical production we had indeed much more than recovered. We had surpassed our 1938 production by something like one-quarter, and our productivity was up by about 10 per cent. Our exports were still reaching record levels, levels, indeed, which our critics a year or so earlier had claimed to be impossible. Moreover, until the early part of this year our exports were making good progress in some at least of the hard currency markets, though the most spectacular progress was perhaps in the non-dollar markets. We were in general more than holding our own, though in a few markets, where competition had become particularly keen, we were no longer able to make fresh ground.
I draw attention to these facts, because there has been a tendency to assume that United Kingdom exports have been so high priced as to be unable to face competition. We must however remember that we have still to face the full force of post-war competition, and it is of vital importance that our export prices should be able to meet the challenge of this keener competition for markets, which has developed during the last few months with a general shift from the sellers' to the buyers' market. I shall return presently to this important question of costs and prices.
We were, therefore, entitled to regard the efforts which our people made in the 3½ years since the end of the war as both praiseworthy and encouraging. No one who followed the dollar-sterling relationship since before the first World War and its development in the last few years could imagine that the problems of that relationship had been finally solved. In paragraph 50 of the last Economic Survey we stressed the fact that the dollar deficit remained the crucial problem, and one requiring to be attacked from a number of angles. None the less, what had happened, and perhaps with remarkable speed, was that we and other European countries had gone a long way with our recovery, thanks to the backing from the United States of America through E.R.P., of Canada, and thanks, too, to the growing strength of European co-operation as the result of the Brussels Pact, Western Union and the setting up of O.E.E.C.
We certainly had not overcome all our grave post-war problems but we had been making good progress in an atmosphere


of expanding world economy. The high level of economic activity in North America has, of course, been an important influence on the progress of European economic recovery, the rapid expansion of international trade being naturally conditioned by the size of the United States purchases, both of primary commodities and of manufactures. The sterling area, in particular, owing to the great volume of its trade with the dollar area, was dependent upon an expansion of that trade for its own continued progress. We realised that in all probability 1948 had seen the peak of immediate post-war demand, and there might at any time be a significant change in the supply and demand relationships.
There has now occurred a turnover from the sellers' to the buyers' market and this vitally important—and somewhat rapid—development in world economic affairs has inevitably had its effect upon our sterling economy. It has tended to slow down and indeed temporarily at any rate to reverse the progress that we have been making towards a dollar balance. As President Truman has so accurately remarked in his mid-year report to Congress,
The decline in United States business activity is reducing imports and this is an important factor affecting the ability of foreign countries to earn the dollars required to restore their economic health.
As the House knows, for many past decades neither we in the United Kingdom nor Europe as a whole have had a direct favourable balance in our trade with the United States. We made up the gap in our balance with the aid of invisible earnings and of the surpluses earned by other parts of the sterling area. The real dollar earnings which kept the world in balance through the sterling-dollar exchange were invisibles—interest on investments, shipping, banking, insurance, tourism and so forth—and the primary commodities that the United States imported from all parts of the sterling area, assisted where necessary by the gold produced in sterling area countries. To mention a few only of these commodities, rubber, tin, wool, cocoa and jute were all large dollar earners for the sterling area. Indeed, prior to the last war, it was through the sterling area that Europe was able to balance her dollar accounts.
So far as invisible earnings are concerned, many will never be restored under the changed conditions. The most important factor is the loss of interest on dollar investments, resulting from their sale during the war. In other cases circumstances have changed, as, for instance, with the dollar earnings of our shipping. It was because we all realised that our invisibles could no longer play as great a part as they had played before the war in helping to pay for our imports that it became more than ever necessary to stimulate to the utmost our direct dollar-earning exports, and at the same time to seek to increase the sales of primary products to dollar countries from the rest of the sterling area.
Before coming to the explanation of what has happened to us in recent months and of the reasons for the worsening of our situation, I would remind the House that this difficulty of balance between the dollar and sterling areas had started to show itself before the First World War and was therefore, quite apart from its war-time acceleration, a deep-seated tendency with which we should in any case have had to deal at some time.
Members have before them, I hope, the short document* we have prepared for this Debate providing a comparison between what we have actually experienced in the first half of this year and our forecasts as set out in the Economic Survey. If hon. Members will be so good as to look at the last three tables in this document, B, C and D, they will see that the tables give a certain amount of information on the course of our trade with the rest of the world which may help to counteract a number of factual misrepresentations which seem to be current.
From Table B it will be seen that our total imports and total exports in the first half of this year to and from the rest of the world were as close to the forecast as any reasonable person could expect. I cannot yet give an estimate for the invisibles, as it is too soon after the end of the half year. In spite of a certain worsening of our situation in relation to the invisibles with the dollar area in the last part of the period, I believe we shall find no great divergence from the original forecast.

* For text of document, see Col. 799.

On this assumption, we shall be able to say that, as we expected, over the first half of this year, the United Kingdom was approximately in a balance on its external accounts, taken as a whole. The two tables following, C and D, illustrate the course of our export trade and show how those exports were distributed among the main geographical areas of the world. Here, too, with the single but very significant exception of our exports to the Western Hemisphere, I think the forecasts have been pretty near to the mark.

I now turn to the first table of this series which gives the facts as to the most important part of the story, namely our gold and dollar deficit. As hon. Members will see, taking the six months as a whole, the total gold and dollar deficit amounted to £239 million sterling, compared with a forecast in the Economic Survey of £195 million, involving therefore an excess of £44 million. Looking first at the United Kingdom part of this table, I draw the attention of the House to the fact that the expenditure on dollar imports was exactly in line with our expectations. In fact, it is obviously fortuitous that the accuracy should have been so great. Nevertheless, it emphasises the point that the worsening in our affairs is not due to any uncalculated over-spending on our part.

As against this, our dollar exports were £12 million less than we expected. This is mainly the result of the fall-off in our trade with the United States over the last three months. Trade with Canada has kept up better, though we believe that still further efforts are needed, and will be made, in this vital market. The receipts from our dollar exports are no doubt still declining. I hope that by the time my right hon. Friend the President of the Board of Trade speaks later this evening he will be able to give the House details of the June figures.

Even more important than the shortfall in exports has been the worsening of the position of our general dollar invisible account. This contains, as the House knows, a whole complex of items covering a large and varied number of payments and receipts. Although it is too early yet to give any detailed story, it is already obvious that the deterioration shown is partly the result of rather heavier outgoings and smaller receipts

on financial items, than were anticipated, and partly of a considerable reduction in our receipts from items such as the sales of oil and of diamonds in the dollar area. As a result of all these developments, the United Kingdom deficit with the dollar area has come out on present calculations—I emphasise that fact because these figures cannot be final, obviously, at this stage—at £160 million sterling, or £30 million worse than we forecast.

At £37 million there is an increase of £22 million over the forecast for the rest of the sterling area, which likewise therefore shows a larger deficit than was anticipated. I have already given the House some indication a week ago of the developments which have thus adversely affected the earnings of the rest of the Sterling area. Prices of a number of important primary commodities produced by the rest of the sterling area have fallen during the half year, and, even more important, the volume of their sales, particularly again to the United States, has gravely diminished. In addition, there has been a certain increase in dollar expenditure in a number of countries, though the effect of this has been much less than the fall in their income.

Finally, we come to the gold and dollar payments to non-dollar countries. It will be seen that these in fact were lower than our original estimate, though the estimate itself represented a considerable increase over the figure of £35 million under this heading in the second half of 1948. This item continues to be a serious strain on our resources, and I am afraid that we can take little comfort from the fact that in this half year the figures are lower than we had anticipated. We hope, however, that the new Intra-European Payments Agreement will ease our situation in this respect.

I may perhaps here interpolate a word or two about this agreement and its possible effect upon our economy. The new scheme will lead to a considerable improvement in our position with Belgium as compared with last year, when we had to make large gold payments which were not taken into account in the division of Marshall Aid. There will be a similar improvement in our position with Switzerland if she joins in the scheme as well, and negotiations are now proceeding with the Swiss upon that point. In the case of Belgium, the result will be that our deficit


will be covered partly by drawing rights, the amount of which has not yet been precisely determined as between different countries, and partly by credits granted on terms similar to the E.C.A. credits which we have taken.

So much, then, for a general explanation of the gold and dollar deficit in comparison with the forecasts. The total figure for the half year, as I said, has come out at £239 million, but, as the House is already aware, this total is made up of two very unequal quarterly figures or one might say six very unequal monthly figures. In the first three months of the year the deficit was £82 million; in the second three months it was £157 million.

It is this deterioration during the latter part of the half year which has caused us all so much concern. Part of it was forecast and expected. We looked for an increase in our programmed expenditure on imports during the second quarter, and this increase was realised, accounting possibly for £25 million more than expenditure in the first quarter. That is partly seasonal. We also expected some seasonal reduction in Colonial earnings, but the decline which has actually taken place is much greater than those expectations. Though accurate figures for Colonial earnings are not yet available, the probability is that earnings from sales to the United States were almost halved between the first and second quarters of the year, falling from nearly £33 million sterling to about half that figure.

Other countries in the sterling area also suffered a reduction in their income during this period, notably from reduced sales of wool, jute goods, and a number of other commodities to the United States. Our payments to countries such as Belgium and Switzerland were, in accordance with our anticipations, heavier in the second than in the first quarter. About 65 million dollars were paid to Belgium and Switzerland, compared with less than half that figure in the first quarter.

Thus, in general outline, we see the reason for the increase of our gold and dollar deficit during the first half of this year. The larger part of it results from smaller receipts from the dollar area, though some of it is due to an increase in the outgoings both of the United

Kingdom and of certain other countries. Put in its simplest form, the sterling area is currently running a deficit with the dollar area at the rate of £600 million sterling a year or one and a half times the total of its gold reserves. No one will doubt that that condition of affairs must be altered.

I mentioned a few moments ago that the prices of many primary commodities, except tin, had fallen steeply—some of them very steeply—in the last few months, so that there can be no question of the price factor preventing sales in these cases, in which there is, indeed, a free market. The fact is, of course, that buyers have held back, as they could afford to do, relying on their stocks and hoping for further falls in prices. This is a normal feature of a decline in trade, and it is, of course, the very danger against which such an arrangement as the International Wheat Agreement is aimed.

Indeed, it was to promote stability in the primary commodity markets of the world and to avoid the special difficulties which beset the trade in primary commodities when supply and demand get out of balance that a whole chapter on this subject was included in the draft I.T.O. Charter. This is obviously one of the fields in which the countries of the world should re-examine the possibilities and come to some agreement upon the remedial action to be taken so as to enable them to carry out their pledge to provide full employment.

So far as the fall-off in our own exports is concerned, we must examine the situation in a little more detail. Exports of United Kingdom manufactures proper have given fluctuating results over the past months in the United States market. That is, of course, natural, as a single month is much too short a period in which to display a trend. I would remind the House that some of the items which are included in the United Kingdom exports are not really United Kingdom exports at all—for instance, reshipped rubber comes into the United Kingdom exports—and therefore one is apt to get a somewhat fallacious idea unless one analyses the actual figures.

Among the principal groups of manufactures exported to the United States, we find that there have been material declines in the amounts exported in


certain cases during the last two months. For instance, the vehicles group shows a decline from a monthly average of £780,000 in the first quarter of the year to £315,000 in April and £206,000 in May. Machinery, electrical goods and cutlery show a decline from a monthly average of £345,000 in the first quarter to £273,000 in April and a slight recovery to £276,000 in May. Exports in the textiles group have declined to a less extent, while exports in the pottery and glass group have roughly maintained their position. Outside North America our exports are still running at a high level, and during June, which was a short holiday month, total exports reached a volume of 145 per cent. of the average monthly figure for 1938, as the House is aware.

I should here, I think, point out to the House that this comparatively small decline in our dollar earnings would not have been so serious a matter had we had ample reserves. We should still have to seek a remedy, but there would not have been the same need for most urgent action. The change in trend of world trade which I have mentioned has highlighted the deep-seated maladjustments between the dollar and sterling areas, and we must, therefore, concert long-term steps to remove that maladjustment if we can; but in view of the state of our reserves, we must also take immediate steps to arrest their decline.

Our general aim and object has always been to have a system that would allow sterling to carry trade all over the world. Our economy is such that it must depend upon a world-wide export trade in hundreds of different manufactures, and anything that impedes that trade is, in the long run, bad for it. We therefore have prided ourselves in maintaining even through the most difficult times and at great cost, a wide area of multilateral trade throughout and, indeed, beyond the sterling area. We have, indeed, according to the size of our country and our population made a very large contribution towards world recovery running into many hundreds of millions sterling—as I stated the other day—and we have incurred huge dollar loans and liabilities which have been used to maintain the strength and stability of the sterling area as a whole.

The long-term problem that presents itself to us and to which we must try to find the answer, primarily in consultation with our American and Canadian friends, though with others too, is how we can secure a stable relationship between the sterling and dollar areas that allows the maximum degree of exchange of commodities while yet preserving to each country concerned the right to decide upon its own internal economic policies. We are prepared and anxious to make our contribution to such a solution, but that solution must be sought upon the basis of continuing full employment in each individual country, a cause to which all the world is most definitely pledged. Perhaps I may remind the House of the words of the draft I.T.O. Charter upon this subject:
Each Member shall take action designed to achieve and maintain full and productive employment and large and steadily growing demand within its own territory through measures appropriate to its political, economic and social institutions.
This end must no doubt be achieved in different ways according to the political philosophy of different nations, but we are all excluded from seeking a solution along the lines that precipitated the tragic slumps and mass unemployment between the two wars.

It is the search for this long-term solution that we started so auspiciously at our meeting last week with the United States and Canadian representatives. As the communique which was issued at the end of the conference states:
It was agreed that the general approach to existing problems must be based upon full recognition of their profound and long-term character. The difficulties of the past few months were no more than an aggravation of deep-seated maladjustments.
This is the starting point for a new effort by the countries primarily concerned to see whether it is possible—and again I quote the words of the communique—
to find solutions which would maintain high levels of employment and enable world trade and international payments to develop on a multilateral basis.
In other words, in a free multilateral world economy can we by national action prevent declines in trade from spreading into slumps such as we experienced between the two wars, or must the various countries or groups of countries to some extent attempt to insulate themselves for


protection against the possible spread of unemployment?

Undoubtedly the war-time developments in Europe and in America have, owing to their unequal effect upon productive efficiency in the two continents accentuated this problem, and it has proved to be deeper seated than some people may have imagined. It is with regard to this "profound and long-term character" of the present difficulties that the communique states:
All parties concerned must be prepared to review their policies with the object of achieving a pattern of world trade in which the dollar and non-dollar countries can operate together within one single multilateral system.

The really important result of the discussions with Mr. Snyder and Mr. Abbott was that our three Governments were in complete agreement that the problems before us could not be solved by any easy improvisation or by any one country alone, and that it was therefore imperative that we should together try to find a fundamental solution. To that end it has been arranged to hold further high level Ministerial discussions in Washington early in September. These discussions will be preceded by preliminary fact-finding talks between officials.

So far as the longer term aspect is concerned, I cannot therefore go further today than to say that we regard it as highly satisfactory that our Canadian and American friends should have shown themselves in agreement with us upon the profound and long-term character of our difficulties in which they and we are alike deeply concerned, and upon the necessity of our getting together as soon as possible to search out a solution and decide what each one of us must do to make that solution effective.

These discussions do not in any way affect our attitude towards O.E.E.C. The communique to which I have referred stated that there was full recognition in the discussions of the vital part which assistance under the E.R.P. is playing in maintaining the economic position of the United Kingdom and of the other countries participating in the O.E.E.C. Our recent discussions and those which are to take place in September will, we hope, strengthen our ability to carry out the co-operation to which the United Kingdom is pledged in common with its

other European partners. The solution of this sterling-dollar problem is in our view essential to enable not only the United Kingdom but also the participating countries to achieve the objectives to which they have all subscribed.

I now turn to the immediate situation for, while we are with the help of our friends finding a long-term solution to our problem which will we hope give stability to world trade, we must maintain the strength of our own great multilateral area of trade, the sterling area.

Mr. Boothby: It is about time.

Sir S. Cripps: First of all let me draw attention to one other passage in the communique which will, I hope, lay at rest rumours which have been circulating for some weeks. I read the passage without any further comment:
In this connection no suggestion was made that sterling be devalued.
And that, Mr. Speaker, I hope, is that.
The strength and stability of the sterling area must continue to be of great importance to the future of world trade. Indeed, any failure to take decisive and immediate action to safeguard our own position and that of the sterling area would render more, and not less difficult, the attempt to reach a fundamental solution. As I stated in the House a week ago, our immediate reaction to these new difficulties was to order a standstill in new dollar expenditure, and I would like to make it quite clear that we regard this inevitable, but we hope temporary, cutting down of our dollar expenditure as a thoroughly evil necessity, both from the point of view of our economy and that of the world. Any restriction of trade is highly undesirable, and therefore we shall do everything possible, in association I hope with the other Members of the Commonwealth and with the United States, to stimulate immediately the dollar earnings of the sterling area.
I now come to these short-term expedients as I will call them, for I shall not give them the name of remedies. The standstill on new commitments applies to all purchases of imports, both on Government and on private account. We are, of course, continuing to honour all existing contracts and commitments and all import licences which have already been


issued. The standstill applies to new purchases. We are making exceptions in particular cases where essential purchases are necessary on seasonal grounds or where failure to make small purchases would have altogether disproportionate effects upon our production and our dollar earnings.
This is the basic principle upon which we shall be working. As far as private imports are concerned, I think it might be helpful to the House and to industry generally if I were to give two illustrations. Spare parts urgently required for machines already in this country clearly satisfy the condition which I have just stated. Production parts for assembly here would normally come within the field of existing commitments. For raw materials which are urgently required, we shall issue licences for the appropriate quantity. This is all emergency action and we shall do our best to operate it in a manner which causes the least dislocation to industry, and I am sure that industrialists will co-operate with us and exercise restraint in their applications to the Import Licensing Department of the Board of Trade.
The standstill, as I indicated last week, will not of course give any quick result in a reduction in the actual rate of expenditure. I do not expect it to secure significant results on the expenditure in the current quarter. The reason for that is that in the normal course of business—and this applies to Government buying agencies as well as to private importers—supplies which will actually be coming forward during the third quarter have already been placed on order.
The standstill is the most drastic curtailment of expenditure which it is possible to make, short of breaking existing contracts. But of its nature it can only be used as a temporary measure. As quickly as we can, we shall need to get back to a more normal programming procedure. But it is no good remaking the programme of imports until we are in a position to make a reasonable judgment of the position for a year ahead. As soon as the process of the division of E.R.P. aid in O.E.E.C. has been done and the present series of talks are over, we shall get to work on a new programme for 1949–50 so that we can then abandon the standstill and work according to a new and definite plan. I hope we shall be

able to get that programme out in September.
In the meantime, however, some medium-term decisions have to be taken. For this purpose we have decided to work on the assumption that we shall not be able to afford in 1949–50 more than 75 per cent. of our imports from the dollar area in 1948. These imports in 1948 amounted to about £400 million. We are thus working for the time being on the assumption that we shall not be able to afford to import dollar goods at a rate of more than 75 per cent. of that figure, or £300 million sterling.
I shall now deal with the effects of such a reduction over the next few months, always bearing in mind, of course, that these are provisional arrangements which may, when we come to make the full programme, be varied. So far as food is concerned, the House is aware that we have bought little food from the dollar area since 1947 except through our contracts with Canada. Wheat represents an existing commitment—the last year of the four-year contract—and will not, of course, be affected. The only marked effect will be upon sugar, and we must, in order to maintain the stock position and not waste dollars in the coming months, reduce the ration as from 14th August to 8 oz., with a corresponding reduction in allowances to catering establishments. This will save 150,000 tons of sugar, costing about 14 million dollars in the period up to the end of the year at 30th June, 1950.
We have also decided, for reasons of which the House is fully aware, to reintroduce the rationing of chocolates and sweets from 14th August at a level of 4 oz. per head per week. This will give a saving of 30,000 tons of sugar in the period up to 30th June, 1950, as compared with the present rate of consumption without rationing. There will be no reduction in sugar for manufacturing purposes, which means that the jam position will remain unaltered. As regards other foods, we do not expect that any reductions in the basic rations will become necessary as a result of the standstill.
My right hon. Friend the Minister of Food is, in fact, today announcing certain increases in other rations. These increases relate to items—butter, meat and bacon—of a perishable character, and are


governed by the current level of supplies coming forward from non-dollar sources. Our food situation, indeed, with the very important exception of wheat, depends more on the course of supplies from our own agriculture and from the non-dollar world than upon supplies from dollar sources. But, even so, do not let us forget that we have to pay for non-dollar imports with exports as well. On feeding-stuffs we hope to be able to maintain the extra rations which my right hon. Friend the Minister of Agriculture announced two months ago. The greater our import difficulties, the more important is our own food production
When the programme for this year was originally drawn up the amount of tobacco provided for would, as I said in my Budget statement, have been enough to allow a modest increase in the supplies of cigarettes. This would have meant a large increase in expenditure compared with last year, when we were living on our stocks. It is now necessary to reduce the 110 million dollars originally provided by 20 million dollars, but this will still mean an expenditure of substantially more dollars in the United States than on our purchases from the last crop. Of course, not all our supplies come from the United States, and I understand that this will mean that manufacturers in general will in due course have to make some reduction in supplies to the public, although probably by not more than 5 per cent. They will, however, be able to maintain the present level, including the special additional supplies which have been got ready, during the holiday season.
Petrol is a difficult problem with wide international implications, and I have not at this stage asked my right hon. Friend the Minister of Fuel and Power to impose any new restrictions upon oil users. I would, however, remind the House that all petroleum products, whether so-called "sterling oil" or so-called "dollar oil," contain a very large element of dollar expenditure, and oil economy is essential if we are to deal with our dollar problem.
On machinery and miscellaneous manufactures the standstill will operate as I explained earlier. Any interference with imports of machinery is obviously undesirable, as we want the best possible re-equipment for our industry; that means in special cases importing some

machinery. But the raw materials to run existing industrial capacity must come first, so that as things now are we cannot afford the considerable quantities of dollar machinery that we have been importing. But of course, when we come to reprogramme we shall include a new import programme for machinery, though necessarily on a reduced scale.
Finally, we come to raw materials. I naturally regard these as the least desirable things to be cut, but there is no alternative. We must, however, see to it that such cuts do the least possible damage to our productive effort. No question of any general shortage of raw materials should arise, as from all sources we expect to import substantially more raw materials than we did in 1948, even after making our new cuts. On the assumption upon which we are provisionally working, there should be enough raw materials to sustain the present overall level of production.
The difficulty will arise because certain raw materials are mainly or largely obtained from the dollar area. The effect of cutting dollar materials is thus to create real difficulty for certain industries, while not affecting others at all. I intend to deal with this situation with great care, for this is a circumstance in which contrivance by industry and flexible action by the Government can do a lot to help to prevent serious dislocation which might otherwise arise.
There are many materials, most of which are known only by the people who deal with them, which play a small but vital function in a wide range of industries. Individually, the imports of each are small, but their industrial importance is far-reaching. If one such material runs short, it may prevent a substantial amount of industrial production. The first principle must, therefore, be to ensure that such materials do not run short. The import programme for these materials has, of course, already been rigorously screened, and it is therefore all the more necessary that we should cut the big items with ascertainable effects, rather than the small items with unpredictable effects. That was the practice followed throughout the war, and I am sure the House will agree that it is right.
Cuts will be necessary in the imports of all the important dollar materials, but the effect of these cuts will vary from


material to material because the proportion of total consumption that we import from dollar sources naturally varies. The principal materials to be affected will be timber, paper and pulp, non-ferrous metals, steel and cotton. As regards timber, dollar imports will have to be cut substantially, but we hope we may be able, by further purchases from the non-dollar area and otherwise, to carry through the housing programme without any substantial alteration. Dollar imports of paper and pulp will also have to be cut substantially—possibly by as much as one-third—but here again we hope to be able to increase our purchases from non-dollar sources, and consequently we hope the effect will not be great. In the case of non-ferrous metals, the cut in dollar expenditure will amount to some 25 per cent., but, because of changes in sources of supply and alteration in prices, we expect that it will be possible for consumption to be maintained at about the existing level.
I should draw attention to the fact that these cuts are on the anticipated programme, and not on the actual existing level; and, as the House knows from having studied the programme put forward for 1949–50, there were increases anticipated in a number of items. I hope it will be possible, therefore, to maintain the existing consumption of non-ferrous metals. As regards steel, we shall have to cut off a part of our imports, so that the maintenance of a high level of domestic production becomes more important than ever. [HON. MEMBERS: "Hear, hear."] I agree with the enthusiastic reception which has been given to that passage and I agree with those who have made it that we hope that the continued spur of the hope of nationalisation—[Interruption]—will continue to give the good results that it has given during the past 12 months. In fact, I hope we shall be able to consume—

Mr. Churchill: The right hon. and learned Gentleman did not believe one word of that.

Sir S. Cripps: I hope the right hon. Gentleman is not being overcome by the hot weather. If he is not, anyway, his manners are. Now, I am afraid that it will not be possible to import all the dollar cotton we had hoped to be able to import. Nevertheless, we shall expect to import at least as much as last year

so that the existing consumption level of United States cotton by Lancashire should not be appreciably affected.
The net result, taking these main items of dollar imports and comparing them with our actual expenditure in 1948, is that there should be a reduction at the rate of 400 million dollars, or from 1,600 million dollars to about 1,200 million dollars. The combined effects of the standstill and of the reduced import programme, which will be worked out in detail, should eventually produce a marked reduction in the drain on our reserves. The Commonwealth Conference, which is now proceeding, will, we hope, also result in similar immediate action by the rest of the sterling group.
In addition, as a result of positive steps taken here and in the United States and in Canada, we hope to increase the dollar receipts of the sterling area and so to improve the earnings side of our dollar accounts. We must realise, however, that before we can restore to the full our dollar spending we must put back at least some of the reserves which have drained away over the last three months and which will continue to be spent during the current quarter before the full effect of the various emergency measures can come into play.
To summarise the immediate effects upon consumption in this country, certain cuts are, as I have said, inevitable—notably in the personal consumption of sugar and tobacco. The industrial use of raw materials of dollar origin will also be affected, though we shall do our best in consultation with industry to limit to the minimum the adverse reaction upon the level of activity in the various industries concerned which should not be very marked.
I will not deal myself with the positive dollar earning efforts that we must make in this country, as my right hon. Friend the President of the Board of Trade will cover that ground later this evening. All I would say at the moment is that a direct increase in our dollar earnings—and in those of the rest of the sterling area—is more essential than ever as a result of what has happened over the last few months. Reductions in expenditure, inevitable though they are, represent a purely negative approach to the problem; our main hopes for future prosperity rest, not upon such reductions, but upon


positive and constructive measures calculated to increase the volume of world trade and our own earning capacity.
I might also mention that a number of short-term measures which are designed to improve our dollar position are at present under discussion with the United States and Canadian Governments. None of them is a suggestion for new financial help outside what is already operating; they are rather methods by which existing arrangements can be made more effective and helpful in present circumstances.
I have now, I think, covered the range of problems from immediate to long-term, and it is all these that we are now discussing with our Commonwealth friends, and as to which we seek their co-operation and assistance. It must be clear to the House that in this matter the interest of all the sterling area countries is the same—to preserve the stability of sterling and the strength of our reserves. Exactly what contribution we can each make to these purposes and how best we can make them must, of course, depend upon the form of our trade with the dollar area. Broadly, we must all of us sell all we can for dollars—even if it means some of the rest, including the United Kingdom, having less as a consequence and we must, as I have already indicated the United Kingdom will do, cut down our dollar expenditure. Those matters I am now discussing with my colleagues from the other Commonwealth countries.
There is one final matter to which I should make a reference, namely, the cost of production in this country and its effect upon our balance of payments. The main elements in cost of production are the prices of raw materials, labour costs and overheads. [HON. MEMBERS: "Taxation."] Taxation on profits is not an element in costs. There is no doubt that in many instances we have had to pay unduly high prices for raw materials, these high prices being to some extent a reflection of the scarcity of dollars in part of the world, as well as of a high level of demand. We have, for example, had to pay high prices for Egyptian cotton due to the extent of the demand for this type of raw cotton in view of the dollar shortage. That high price has necessarily been reflected in the cost of our manufactured goods, since a considerable part

of our cotton industry has been built up upon the use of Egyptian cotton.
There are many other cases in which a concentration of buying on non-dollar materials has resulted in our having to pay higher prices for raw materials from that source than for similar materials from the dollar area. This situation is not likely to right itself unless and until we have achieved the fundamental solution to which I have earlier referred, and it becomes possible once again to purchase goods freely from either dollar or non-dollar sources. The acute shortage of dollars must, of course, tend to relieve the pressure of demand for dollar goods and increase the pressure of demand for non-dollar goods, with the result that dollar prices tend to be lower and non-dollar prices higher for the same goods.
Apart from the incidence of higher raw material costs there are other elements of high costs in our production, particularly in some of our older industries, elements which are within the control of our own managements and workers. I must emphasise here, as I have done so often in the past, the need for our production methods to be brought and kept up to date and at the highest point of efficiency if our industries are to remain fully competitive in world markets. That is not to say that all our prices are at present too high or that all our methods are old-fashioned—very far from it. But we must examine those particular sectors of our industry which show themselves uncompetitive through high costs and see where and how their efficiency can be improved. There is a positive and pressing duty upon all engaged in such industries, whether managers or workers, to put into operation methods which can improve their productivity.
I need not enumerate here what those methods should be—they have been explained and discussed as long ago as in the original Working Party reports and elsewhere. The provision of more mechanical and electrical aids, more standardisation and simplification where this is appropriate, a more efficient layout of production—these are some of them. What we need to do is to increase efficiency and reduce costs by paying greater attention to such matters as the staffing of machinery more economically and the doing away with outworn traditional restrictions on the use of labour.


I must appeal to all engaged in industry, both management and workers alike, to be constantly alert for new ideas and improved methods, whether they result from new research or from the experience of their competitors, and to resolve to put them into effect with the minimum of delay.
There is also a positive and pressing obligation upon all sides of industry to maintain and increase our dollar sales, and to put them in front of other exports wherever possible. At the same time, and side by side with our attempt to reduce prices by greater efficiency, we must avoid all countervailing increases in our costs due to rising personal incomes, especially so at a time when each and all of us is called upon to do our utmost and to put forward our best efforts.
It is only those with a total disregard for their own future welfare and that of their country—or those who have the active desire to destroy our economy—who will at the present time press for general wage, salary or profit increases. I must again warn the House and the country that unless the maximum restraint is shown in this matter by all sections of the community we shall indubitably find ourselves unable to surmount our difficulties.
Provided that we in this country are prepared, in the various ways which I have outlined, to make the great effort demanded of us, I do believe that, with the help of our American and Commonwealth friends and with European co-operation through the O.E.E.C., it is possible for us to find a long-term solution to the problems of our dollar-sterling balance of payments. That will not be a short task. We hope to resume our talks in Washington in September, but we could hardly hope to work out a complete solution in the course of a single series of meetings. It will quite probably require further consultations after those in Washington which may occupy weeks or perhaps even months. During that time we must see to it that our reserves are safeguarded so far as is possible.
I am very glad that the people of this country have accepted these new difficulties in a sober and responsible spirit and have not allowed any disabling atmosphere of crisis to spread itself. They can, I believe, be confident that both

their own Government and the Governments of the other countries concerned are fully aware of the seriousness of the situation that has developed and are determined to deal with it by fundamental means that will preserve throughout the world that full employment which has been the main economic and social aim of our civilisation since the end of the war.
Democracy, economic independence and full employment form a magnificent programme for the free peoples of the world; we are now challenged by events as to whether we can maintain all these three objectives. We must spare no effort to see that we establish these three as the great safeguards for the liberty of the peoples of the world. Their achievement will establish our victory in the cold war, it will justify the claims of democracy and will ensure the freedom and happiness of the future generations. Much is at stake. Let our response match up to our responsibilities.

4.48 p.m.

Mr. Oliver Lyttelton: I think it would be fair to say that the Chancellor's speech divided itself into about four sections. The first section was a discussion of the figures which have led to the increase in the dollar and gold deficit of the country in the last quarter. Upon that point, I only wish to ask the President of the Board of Trade whether he can tell us what has been the deterioration in the position during the last few weeks. Speaking from memory, I recall that the figures show that in the first quarter the deficit was £82 million and in the second quarter £157 million. My belief, which I should like to have confirmed—or rather which I hope will not be confirmed—is that the rate of deficit is increasing.

Sir S. Cripps: It is remaining stable.

Mr. Lyttelton: I hope that the President of the Board of Trade will be able to give us some figures.
The second part of the Chancellor's speech was a homily on the advantages of multilateral trade which came rather oddly from a Chancellor who has a number of bilateral agreements in both pockets, and whose solution of many of the difficulties which now beset us is in the increase of bilateral trade.
The third part of the Chancellor's speech dealt with immediate cuts, and I take issue with him over that. I thought that some of the things that he said about those immediate cuts fell little short of being deplorable. Although he was strictly accurate in everything he said, the whole tendency of his remarks was to make the people of this country believe that the sufferings which they will have to undergo as the result of cutting imports will be of negligible proportions. What he said about every commodity upon which he touched had this message "But of course this will not matter; by this means or that the impact of these cuts will be reduced."
I suggest that this is not at all the way to deal with the situation and I will have something to say about that later on. It is absolutely ridiculous to suppose that if we cut imports from hard currencies by £100 million the effect upon the rations and on the other necessities of the population will not be very severe. They can be measured exactly in the terms of £100 million. If we could always have done without them, as the Chancellor appeared to suggest, why did we have a programme to spend the money originally?
Upon this point about cuts the Chancellor said that this was the negative part of our policy, and this negative part is to be continued—the cuts are to be continued—until the Finance Ministers and the right hon. and learned Gentleman himself resolve the long-term problem. One of the results of the meeting at Chequers has been to discover that the disparity in the balance of payments between the Western and Eastern Hemispheres is a deep-seated problem; not a very startling result of these discussions, and I shall have something to say about that, too. The last part of the speech consisted of elevated discourse about the need for reducing costs and making the necessary national effort.
I should like to say this generally on the point of presentation to the public. I think that both the original statement, the Chancellor's communique from Chequers, and the statement we have heard today convey extremely little to the man in the factory, or the field or the mine. What does he really think of phrases like "personal incomes"? We

ought to be more blunt and say we mean wages and salaries. That is more readily understood. Do not let us shy away from using the word, "wages," because it is a common word, and will be understood—[Interruption.] The Chancellor is trying to tell me that I do not understand what "personal income" means. If I do not understand it I do not think that others who are not daily concerned with these matters will understand it any more.
I personally think that over all these things the Minister of Fuel and Power was nearer the truth than the anodyne statement which the Chancellor has put out this afternoon. He has been laughed at for betraying emotion. I do not think we should laugh at him, nor do I think that he should apologise for it. He should remember, what Disraeli said, "Never apologise for showing feeling; remember that you are apologising for truth." The phrases like those with which we have been regaled do not bring home the truth to the population. Nor are phrases like, "high-lighting the deep-seated maladjustment" either elegant in themselves or very explanatory to the public at large. Even to us they ring oddly, and I think falsely; because if the maladjustment was so deep-seated is it not rather curious that the Economic Survey and all this galaxy of Finance Ministers should only have discovered it in the last week or so, and find it necessary to incorporate such a resounding platitude, such a blinding flash of the obvious, in a week-end communiqué?
All this Economic Survey of 1949 was intended to do was to give a reliable estimate upon which a reliable picture could be formed of our position in 1949. All that it has really done, except in the unessential figures, is to underline the depth of the Government's miscalculation of the major items. The Chancellor was quite fair in his explanation of the figures. He rightly said that over all those items which do not matter the Economic Survey has come out about right; but on those that do, such as the balance of payments in the Western Hemisphere, they are wildly out, and the deterioration has been very much greater in the last quarter than it was in the first.
The really serious thing is that the situation is deteriorating, and deteriorating rapidly. That is what wants to be said;


and that these cuts, although they are immediate and in some respects will be crippling, are only a small foretaste of what is going to happen to this country unless the "deep-seated maladjustment" and "long term problem" is resolved. Upon that we heard that the Government is to set up a fact-finding body of officials. It is rather late in the day to find facts now. And what "fact-finding" means in Government jargon is that they do not know what to do and want a period when they cannot be over-questioned, during which they will say, "We are still trying to ascertain the facts."
There was one part of the Chancellor's speech which I thought was a little unfortunate. It was the part dealing with American conditions. There was a time, not very long ago, when the rise in business activities in the United States and the increase in prices were one of the main causes of our disaster.
I said"—
said the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton)—
that we have run into a great storm. … These are not the same dollars that we borrowed by reason of the depreciation in their purchasing power. That is the first reason why this storm has suddenly risen. …"—[OFFICIAL REPORT, 17th August, 1947; Vol. 441, c. 1655–6.]
The Chancellor, later in 1948, said:
Although we do not want to see any catastrophic fall in prices or raw materials and foodstuffs, because that would only further upset world economy, we can very legitimately welcome a reasonable fall."—[OFFICIAL REPORT, 16th September, 1948; Vol. 456, c. 251.]
I advise him to pass on those words to some of his followers, because it is now generally said in the country by Socialists that the reason for these catastrophic cuts of which they have had some notice is the fall in business activities and falling prices in the United States of America. Rising prices, worse terms of trade for this country; falling prices, falling exports. In both cases disaster. I think it would be a good plan to look for some of these causes rather nearer at home.
The Chancellor, I think I am right in saying, attributed the cause of the increase in our deficit earnings first to the decline in sterling exports to the United States; to the decline of sterling area exports; to some increased gold losses to Switzerland and Belgium and, I think, some further

loosening of blocked sterling. He can interrupt me if I am wrong, and he—

Sir S. Cripps: I did not say blocked sterling.

Mr. Lyttelton: If I am wrong about that—

Sir S. Cripps: I think that what the right hon. Gentleman has omitted is the invisibles. I said there had been a considerable falling off.

Mr. Lyttelton: I would add to the ones which he stated—and I am afraid I must say it, because I believe it—a growing lack of confidence in sterling. If that is true, it is by far the worst of these things. I believe myself that the Chancellor's principal difficulty is fear that those who become possessed of sterling balances will try and turn them into some other currency, either because they regard sterling as an unstable currency today, or because they believe that by changing it into some other currency they will be able to buy things cheaper than they can here.
This is the peril, and it is not to be glossed over by saying that a cut of £100 million—which is the negative part of our policy—will not be felt by the population, or will be felt only to a small degree. This is not the way to treat the British public at all. They must be told now that these cuts are only the precursor of very much harder conditions which will come. So far not only is it true that the maladjustments are deep-seated but the remedies to be applied to those maladjustments will be very long and hard; and during all the period of the Chancellor's remedies a regime of decreased imports and decreased raw materials will apply.
The right hon. and learned Gentleman has not made it clear yet, and I think it is the plain duty of the Government to convey to the public, that this is not a remote or distant danger. It is not like an earthquake in China—a disaster which is far from us. This crisis is immediate and urgent, and it is not financial. The balance of payments concerns the whole life of everybody, and it is not just a loss in financial game. The public are still unaware of the severity of the crisis. Most of them do not read "The Economist," and have not read that burning sentence—a terrible message:


In the long run nobody owes the British people a living, and the point must come when they enjoy only that standard of living for which they are prepared to work.
I criticise the Chancellor's general approach to this subject because he has not made it clear that dollar deficits mean two things—less to eat and unemployment. They mean less to eat because we cannot pay for the food, and they mean unemployment because, as the Chancellor has already partially confessed, we shall be unable to import the necessary raw materials to maintain the present activity in our industries.
Last week I read two articles—I think they came from the same hand, that of the hon. Member for East Coventry (Mr. Crossman)—in the "Sunday Pictorial" and in the "New Statesman." The effect of those two articles was to say that the Tory policy consisted of wishing to force down Government expenditure so as to allow unemployment to rise, wages to be lowered and sterner discipline to be imposed in the industrial machine, and that these measures were intended to restore confidence in the minds and hearts of American bankers. These charges are, of course, false, and I do not think they would be worth denying if they did not contain something which is dangerously misleading to the public upon the very subject on which they now want guidance. It is dishonest to pose an alternative like this: on the one side, a Tory régime with high unemployment and the dollar deficit or gap bridged by American bankers; and on the other side a Socialist régime with full employment and what the hon. Gentleman calls "fair shares for all," by which I think he means rations on the present scale, and the gap in dollar payments still unresolved.
That is not the alternative at all. Government expenditure has to be reduced, nationalisation arrested and the confidence in the £ restored, because without that confidence we cannot eat and without restoring that confidence we shall have large scale unemployment, for we shall not have the raw materials to nourish our industries any more than we shall have the raw materials to nourish our bodies. We want to know soon what this Government of planners are going to plan concerning these vital questions of food and raw materials. All we now

know is that they are to be cut in the immediate future, while the Chancellor and his colleagues seek out a long-term remedy for a long-term maladjustment. So far as I can gather, the policy of His Majesty's Government is further doses of the same medicine.
I have already dealt with the cut in imports. I again say and I cannot say it too often, that lower rations and unemployment are the inevitable consequences of this policy. I hope that the President of the Board of Trade will enlighten us a little more about the standstill upon raw materials which form a part of British exports. I did not think the Chancellor was very precise upon that point concerning raw materials which come into this country and afterwards form a part of our exports. Is there to be a series of criteria, such as what the conversion rate between the raw materials and the finished export is going to be, or are licences going to be issued to those who say that the end product, as the American call it, is ultimately going to be exported? This is the point on which there is a great deal of uncertainty at the moment, and the President of the Board of Trade will do a lot of good if be resolves that question at once.
The second feature of the plan, so far as I can discern it, is the series of further bilateral agreements; and the homily about multilateral trade was merely an academic exercise, however it may have appeared to the right hon. and learned Gentleman. The object of these bilateral agreements is to oblige people who earn pounds sterling to spend them here on goods which they might not otherwise wish to buy, or which they might consider too high in price. Bilateral agreements are the pupae of the Schachtian philosophy and doctrine, and we are gradually building up a great number of artificial values for the £ as a result of these bilateral agreements. I think that in this part of our economic history they will tend to intensify and aggravate our present difficulties, because they will wrap up the £ and British trade in a sort of bilateral cottonwool.
I now have a serious question to ask the President of the Board of Trade, to which the House is entitled to have an answer this evening. Has he concluded either de facto or de jure a bilateral


trade agreement with Russia? If so, what is its extent, and in concluding this bilateral agreement has he been in consultation with the American administration and are all the details known in Washington? I should regard it as unfortunate if, while seeking aid from the Americans in this general alliance, we did not make those details known to them.

Mr. Cobb: Is the right hon. Gentleman suggesting that the British Government should take their instructions from New York, in the same way as the right hon. Gentleman does?

Mr. Lyttelton: Of course, I suggested nothing of the kind. I only said that when we are asking the aid of certain people, when we are discussing deep-seated maladjustments, when we are pronouncing homilies about multilateral trade, and when we have signed an international agreement and subscribed to the theory of multilateral trade, it is necessary to say that we are still continuing bilateral agreements with a country from which many supplies are now being cut off by our future partners. I did not suggest for a minute that our policy must be subordinated to that of America, but I do say that they are entitled to be informed. That is where I stand. I also say that this House is entitled to be informed. I am asking the President of the Board of Trade to give us a definite answer this evening.
The third part of the positive policy seems to be a great drive to increase exports to America. Part of any economic policy must be to try to increase our dollar exports, and nobody could deny that there is a field for increasing dollar exports. At the same time, however, it is deluding the public to leave them with the idea that any practicable quantity of exports to the United States will solve the balance of payments difficulty or bridge the gap. The United States are the home of manufactured goods. They produce the catalogue, so to speak, of modern manufactured goods. Those who think that there is an almost unlimited field—tariffs or no tariffs—for British manufactured goods in the United States ought to see their doctor, if they have one. There used to be a phrase about "sending coals to Newcastle," which is now obsolete. By trying to sell manufactured goods to the United States,

we should be "sending coals to Newcastle." My estimate of the possible increase of our exports to the United States, with every barrier taken down and with conditions which do not exist today is that they could not possibly increase by more than £40 million or £50 million. That is a notable contribution towards bridging the gap, but it does not close the gap permanently.

The President of the Board of Trade (Mr. Harold Wilson): The right hon. Gentleman is making an important statement. Was his estimate of £40 million or £50 million made on the assumption of all the barriers down or on present assumptions about the American market?

Mr. Lyttelton: Naturally, I am an unofficial person and I must make an unofficial estimate. It is not based upon nothing. If the right hon. Gentleman looks into the archives of the Board of Trade he will discover that in other days a study was made of this matter. On the assumption that there is nothing to prevent British goods going to America, then an increase which I estimate to be £40 million or £50 million above the level of exports now would be possible.

Mr. Wilson: With all the tariff barriers down?

Mr. Lyttelton: With no tariffs and with such assistance as the United States Government can give. I should be happy to hear that my estimate is too low.

Mr. Harrison: If we keep tariffs as they are, what would be the right hon. Gentleman's estimate of the possible expansion of our trade?

Mr. Lyttelton: I am talking about manufactured goods, of course.

Mr. Harrison: Yes.

Mr. Lyttelton: That is a question which I could not accurately answer. My main point is that it is not mainly tariffs which keep British manufactures out of the United States, but the fact that America is the home of manufactured goods. Anybody who thinks that he will be able, to sell large lines, say, of sewing machines, to the United States, ought to consult the Minister of Health and get a panel doctor to look at his brain.
The whole of this situation leads me to express an opinion with which I have


often troubled the House before. It is that we cannot readjust this deep-seated maladjustment by exports only and we cannot deal with this situation only in terms of current trade. There must be movements of capital between the Western Hemisphere and the Eastern. One of the effects of such a movement of capital will be of the greatest advantage in developing the Empire and dealing with Imperial problems. That is one of the long-term solutions to the problem. [Interruption.] I think I overheard the Chancellor saying that that was very obvious. It may be very obvious—

Sir S. Cripps: I said, "A blinding flash of enlightenment."

Mr. Lyttelton: But it is entirely neglected by His Majesty's Government. What are the necessities which must be satisfied if we are to get that movement of capital from West to East? The first is a belief by the investor in the Western Hemisphere in the economic soundness of Western Europe and of this country. The second is that they must feel that the currency which they are going to buy in order to make that investment is more likely to rise in value than to fall. The third is that the investment they make should result in the production of goods at competitive prices. The fourth is that they are not going to be taxed out of existence in life and robbed when they are dead. The fifth is that they will be able to sell the pounds if they wish to reverse the investment. The last is that they are not to be bought out by the State when their business is in a prosperous condition and afterwards paid out in depreciated Government scrip.

Sir Richard Acland: Will the right hon. Gentleman give way?

Mr. Lyttelton: I really do not know that there is anything the least funny in this subject.

Sir R. Acland: It is very serious.

Mr. Lyttelton: It is no exaggeration to say that none of these conditions exists today, nor can they be made to exist by the Government policy of further poultices of bilateralism abroad and Socialist austerity and cuts at home. The tragedy about the Socialist restrictionist policy is that the more they restrict the

worse they make the situation. If British travellers have to be turned upside down and shaken in the British Customs to see if anything realisable falls out of their pockets or their clothing, it is not usually considered to be a very good means of advertising the confidence of His Majesty's Government in the international value of the £.
In exactly the same way, when we require to buy goods from foreign countries, if the only form of negotiation which His Majesty's Government favours is bilateral negotiation, that again tends to weaken confidence in the £. The crying need is to begin to break out of some of these bonds. It is absolutely necessary to say that no Government of any political complexion can reverse the trend very quickly. It is necessary to make a beginning, and instead of making a beginning the Government are going further into these measures—more bilateralism, more cotton wool, more restrictions, more cuts in imports. The plain fact is that the Socialist economy will not work. That is very serious. It will work neither under the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton) nor under the right hon. and learned Gentleman the present Chancellor of the Exchequer. What is still more serious is that the rest of the world has found out that it will not work.
We must allow the icy wind of competition to blow through some of these bilateral agreements. We must have new brooms in these swollen Government Departments. We must even go so far as to cut down some of the Ministerial limousines. It will not work. The impact of events has already knocked down some dearly-loved Socialist doctrines.
Rough winds do shake the darling buds of May.
—May Day. One of the things that has gone overboard in the last few days is the theoretical justification of bulk buying. As an economic theory it has now disappeared, for we see the spectacle of the Minister of Supply, who was at one time a member of the London Metal Exchange, following—avowedly following—world prices up and down from day to day. I wish to be fair. I do not underrate for one minute the practical difficulties of opening the London Metal Exchange under present conditions. I do not under-rate them, but the Metal Ex-


change is kept closed not because the Minister of Supply any more believes in the bulk buying of non-ferrous metals but because he thinks that it is too difficult to open that Exchange for practical reasons. All that has happened is that we now slavishly follow world prices up and down from day to day, and instead of these world prices being made in an open London market and earning us some foreign currency, they are now made elsewhere.
I agree profoundly with the Chancellor of the Exchequer that there is no short-term solution to this problem. It is the trend which must be reversed. I must say that in face of an emergency which I think the Chancellor has much underrated, for reasons which I do not profess to understand, it is an act of wanton cynicism to proceed with the nationalisation of the iron and steel industry. The remarks which the right hon. and learned Gentleman made upon the subject of the dawn of nationalisation being the cause of the increased production of steel, are really quite unworthy of him.
In conclusion, I would say that the people can have a welfare State with full employment and today's rations and the present financial policy, only for a very short time. All these extravagances and follies are coming home to roost. At the end of the argument, when the tally is struck, the welfare State can guarantee its citizens everything except the two things which really matter. They can guarantee the welfare of the citizen from the cradle to the grave. They can protect them in times of emergency from the terrors and evils of unemployment and of sickness. The only things with which they cannot provide them are food or work, and this is the problem which hon. Members opposite have to ponder when they look at our very serious crisis and study soberly what the solution should be.

5.20 p.m.

Mr. Clement Davies: With some of the statements made by the Chancellor I find myself in complete agreement, and I would begin with the tribute which the right hon. and learned Gentleman paid to the country for the continued and gallant effort which it has made, not only since the war, but indeed for a period of ten years from the beginning of the war, and which it is still making. The second one is the need,

in order to maintain our standard of life, our social services and this country's position among the races of the world, to restore world trade upon a multilateral basis. I gathered that the Chancellor himself would condemn bilateral agreements and accept them as purely temporary measures, and that what he really desires is general multilateral trade.
The next point is that sterling should be accepted in every country of the world as it used to be as a medium of exchange. That means, of course, that at all times and everywhere sterling and the dollar will be interchangeable. Next, the Chancellor also desires—and, incidentally, this desire is not a monopoly of the right hon. and learned Gentleman or of his supporters—to maintain full employment, not only here, but in every country in the world so that each may support the other. Finally, very rightly, the Chancellor again called the attention of the House and the country to the seriousness of the situation.
No good purpose can be served by decrying or attempting to decry the gravity of the situation. The position is critical. Our indebtedness has started to grow again, and our gold reserves have been seriously depleted. We are having greater difficulty in selling our goods, and unless we are able to stop this decline, it will lead us to disaster. Not only would there be a cut in the standard of living, a cut in the amount of raw materials which we could obtain in this country, but there would be mass unemployment.
The only query that I would put here is: How much longer have we to go on having statements of this kind? The Government have now been in office for four years. They came into office immediately after six years of world war, and credit is due to them for a great number of things which they have done, but, surely, the point ought to be reached now when we could say that this policy is not succeeding and that we ought not, all the time, to be faced with some new crisis. We have had a whole series of crises during the last four years. Difficulties were inevitable at the end of six years of world war, and especially when one remembers the tremendous part which was played by this country during those six years. We remember our position with a population of 50 millions, of whom this


country itself can feed only two-fifths, having to buy the food for all the rest from abroad, and that we can only do that by continued trading and selling our exports so that we are continually able to buy the raw materials which we have to import in such large quantities.
Of course, in those circumstances, difficulties were inevitable, but some of us were calling attention to these very matters and difficulties when the war was still going on, and we were asking what the policy of the then Government was likely to be when the war terminated. We kept on pressing for something to be done, and, at last, the Coalition Government produced the first White Paper. All that it did was to describe factually what might be our position, as well as the problems that would confront us, but there was no suggestion of what the policy should be in order to deal with that situation.
Then, this Government came into power in 1945 when the war was over, and they issued their first White Paper in February, 1946. It was again a review of the situation and of the problems that would be confronting us, but making the statement that all would be well if we could reach a volume of exports amounting to 175 per cent. of what we were exporting in 1938. I agree that the Government did not pin themselves down to any exact moment when that position could be reached, but, undoubtedly, the impression was left upon us and the country that that point would be reached in a fairly reasonable time. It has not been reached today.
This is July, 1949, and that was the estimate made in February, 1946. What happened? Soon afterwards, we had our debates, very much the same as the Debate which we are having today, and it was quite obvious towards the end of that year that we were getting into real difficulties which would be intensified. We would have had unemployment and would have had to make deeper cuts in food rations and raw materials, but for the £1,000 million which America put forward as a loan to us and the £250 million from Canada. We then supposed that all would be well, and we remember the statement made by the then Chancellor of the Exchequer that all would be well certainly by 1950, that we would have gone some way to getting

on an even keel and that by that time we would be repaying that loan with interest. That was towards the end of 1946.
Two years ago, almost to the very day, as the result of strong requests made by some of us, we had a Debate exactly similar to this. Again, the crisis was coming, and, unless we could meet it, disaster was facing us. It will be remembered that the Prime Minister came down to the House and made a speech very similar to the one made by the Chancellor today. A whole series of cuts followed—a cut in petrol, cuts in regard to food, a cut in paper and a cut in timber—almost exactly following the same lines. The Prime Minister began by asking us, as the Chancellor has asked us today, for greater work and greater energy, and finished by asking that there should be an extension of the hours of work.
Now, the Chancellor has made his statement about the desirability of having sterling once again a universal symbol accepted by foreign countries, and has repeated the view about the desirability of multilateral trade. It is all very well encouraging us to greater efforts and telling us what we can achieve, but it is left to mere exhortation, and I cannot see how we can leave the matter in that position.
Whilst hearing all the time about the desirability of multilateral trade, we get news of some bilateral agreement that has been reached with consequent higher prices which we have to pay for the goods that country sends us, although, I agree, compensated for by the higher prices we can obtain for our exports to that country. That is one of the difficulties which the Chancellor of the Exchequer and the President of the Board of Trade will have to face. Though they are now asking that more goods shall be sent to America instead of to the non-dollar countries, what a great temptation there is to send them to non-dollar countries because of the high prices obtainable there owing to these bilateral agreements.
Returning once again to the position at the beginning of 1946, in spite of the cuts and in spite of all that was then facing us, nothing was done with regard to a policy. I remember standing here at that time and asking the Government what was their policy. We have heard about these cuts, and how the Govern-


ment are going to meet the present crisis. But what would have happened if just about that time, or a little later, Marshall Aid had not been mentioned, and we were now about to consider it? At that time, the gap, even for this country, was rather greater than is today the gap of the sterling area as a whole with regard to the dollar countries. It was over £600 million. We were, undoubtedly, face to face with a tremendous difficulty; but then Marshall Aid was to come to our assistance.
We had our Debates with regard to that, and what were we promised? We were promised that all would be well if this could be continued from year to year, and that we should find ourselves going comfortably along into a safe harbour—not only ourselves, but the whole of Europe—and that by 1952 we should be so well established that we should be paying back what we owed and able to stand on our own feet. In the very first year of Marshall Aid, here is the Chancellor once again telling us that the gap is widening, that our difficulties are increasing, and that sterling cannot possibly compete with the dollar. The world is still divided into two—a dollar and a non-dollar world. We are still far away from the point where the sterling is accepted everywhere as the symbol of exchange. Am I, therefore, putting the matter too high when I say that the Government's policy has failed?
On these occasions, one does not want to introduce party politics; the situation is too grim. We are all in this together, and surely our one desire is the success of this country, general prosperity, the maintenance of our standard of life, and full employment which is so essential to it. But once again we are face to face with this difficulty which has to be met by new cuts which the Chancellor has just mentioned, under a policy the nature of which we do not yet know, but which will be the subject of discussion some time in September somewhere in the United States. What is the Government's policy? How do they propose to achieve it? I fear that the Government have relied all along on political and legal sanctions rather than on economic sanctions, and that these political and legal sanctions have misled them.
When the Chancellor was speaking, it occurred to me how wrong it was to

control everything from the centre. He has made cuts in all kinds of essential raw materials coming from the dollar countries. He said, "Do not worry; all will be well. We can make up for what we do not get from the dollar countries with what we get from the non-dollar countries." Why wait until now to make that discovery? If the Government are so well versed in the position, and if they can watch it from day to day and guide the country, why could they not have avoided this crisis? What is more, we are now passing from the position in which I could see the necessity for political and legal sanctions.
During war, of course, we had to surrender all power to the Central Government. One cannot change overnight from a war to a peace footing, but one can change overnight from a peace to a war footing. What is more, after a long war such as we have just experienced, there is bound to be a world shortage of pretty nearly everything, and there is likely to be tremendous competition for the goods that are so much in demand. Therefore, it was necessary to keep political sanctions in being. But now the position has changed; four years have elapsed since the war ended, and there is now not the great shortage that there was. Indeed, we are now being told everywhere that the sellers' market has disappeared and that we are now in a buyers' market. A new situation has arisen, and we can say that, whatever policy we were following during the first two years, or even the first three years, of peace, the time has now come for us to turn our minds away from the conditions which guided us in time of war to what should be our general policy in time of peace.
I fully agree with every word of condemnation that the Chancellor uttered of restrictive practices. Such practices have been the cause of more disaster to world trade than almost anything one can mention. Unfortunately, this country in particular has suffered from them since 1914. It was not the Socialist Government that began restrictive practices. Right hon. and hon. Members above the Gangway on this side have always rather favoured certain restrictive practices. Such a policy has hit this country particularly hard because prior to 1914 it was, for trade purposes, the freest of all the countries in the world; but since that time we have not only had the restrictions of the 1914–18


war but in between the wars we also had protection here and there, cartels, quotas, agreements, bilateral agreements between major companies, and things of that sort, all of them restrictive, and all of them leading inevitably to a narrowing of world trade and the upsetting of the natural balance and flow of trade.
Although they helped to give a certain protection to certain sections, all of them tended to assist people to play for safety. The result is that today we are not trading naturally, but all the time, even down to the smaller concerns, we are playing for safety. The one bright feature of the statements recently brought to the House by the Chancellor was in the statement, to which the right hon. and learned Gentleman referred this afternoon, which was issued on Sunday as a result of the talks at Chequers. It was that our aim must be the achievement of a pattern of world trade—not merely dollar trade, not merely Empire trade, but general world trade—in which the dollar and the non-dollar countries could operate together within one single multilateral system; not two worlds, as we have today, but one.
What I want to know is whether the Government as a whole believe in the need for multilateral trade? I know that the Chancellor of the Exchequer, I believe the President of the Board of Trade and I am certain the Prime Minister have referred to this, but if the Government really believe in that need, what is their policy to try to achieve it? We are told all the time about this dollar shortage. What does it really mean? It means in ordinary terms that we are unable to sell enough of our own goods at such a price as will enable us to pay for goods which we are buying from the Western Hemisphere. In our failure to sell sufficient to pay for the goods we need, undoubtedly tariff walls have played a very considerable part. I therefore approve very strongly of the interruption made by the President of the Board of Trade a few moments ago. Undoubtedly tariff walls have played a part.
But they are not alone. I am surprised by what the Chancellor of the Exchequer was obviously hinting at today—which was contrary to every speech he has made hitherto—that prices do not enter into it. Surely it is competitive

prices that matter most of all, and it is because competitive prices sometimes hit home producers that we get tariff walls put up. In spite of the tariff of the day, we are able to export quite a large quantity to America, but will the President of the Board of Trade deny that we could export far and away more if the prices were more competitive? As I understand it, the difficulties we face in America—and the President of the Board of Trade has referred to them—are (1), high prices; (2), bad dates of delivery; (3), bad make-up; and (4), poor advertising. If these could be cured in some way there would be a far greater sale of our goods.
The Government may be able to do a considerable amount in connection with the first point—the price. The Chancellor rightly said that high taxation does not enter into the question of costs, but it can affect the manufacturer in his replacement of machines and it can affect very considerably our methods or the improvement of our methods of production. The Government can give considerable help in connection with the first point, and they can also help with the other three if they do not encourage, by these bilateral agreements, easy sales at high prices to those countries where quality and date of delivery do not matter anything like so much as they do in America. If the Government could say to those people, "Do not export to Yugoslavia or any of those countries; keep your bargain, be to time, and deliver at a price which will tempt the Americans to buy," there would be an improvement.
Is it denied that prices are too high today, not merely for the dollar countries but also for the non-dollar countries? Is it not true that some of the European countries will not buy because our prices are too high? Is it not also true that our prices today are even too high for the home market and that housewives, having known what shortage was and desiring to buy at the time of shortage, now can see the stuff in the shop windows but at a price which is too high for them.
What, therefore, do I think is necessary? It is that we create the greatest possible measure of competitive conditions in every market and every industry. I want to see the fresh, bracing air of competition coming into industry. No more of this protection and giving them


safety. No more of this position where they need not trouble what is the price of their raw material because they can be quite sure of selling at a sufficiently high price. As has been said by Member after Member of the Government, we ought to forbid all restrictive practices, wherever they come in. That was said by the Prime Minister two years ago, but what has been done to forbid them? If they come from employers—indeed, especially if they come from employers, with rings and things of that kind—the power is in the hands of the President of the Board of Trade to stop them. Equally bad are restrictive practices if they are the out-of-date restrictive practices by trade unions from the days when we had mass unemployment and when people were afraid of being out of work. This is not the moment when the country can tolerate restrictive practices which hamper production.
Then, with a complete and full acceptance of the real necessities of life, surely we can remove a number of the controls which hamper production at the moment. It is no good asking me which; I am not in the same position as the President of the Board of Trade who is able to go with care through these controls. I know he has gone through a great number and has taken away many forms, licences and so on, but surely we can go much further than that. The right hon. Gentleman knows, as we all know, that allocations are wasteful in every way. They waste time in applications for these licences and, human nature being what it is, what is there to prevent a man, unless he has a very sensitive conscience, from asking for double what he really requires in order that he may be quite sure that he has sufficient to carry on with, should there be another shortage?
Let us allow prices to be determined competitively. With regard to the Government's own expenditure, two years ago, in 1947, they made cuts. I ask them again to look at what they can cut down in unremunerative capital expenditure. I do not mean such things as houses; houses represent remunerative capital expenditure because, if we get a healthy people, all the better—our production goes up. There must be any amount of material in a Budget of £3,500 million where there could be a very helpful and probably a drastic cut.
These matters are drastic and they are bound to be painful. The only question is, how can we bring this country back into a strong position where it need not go cap in hand to anyone and where it can maintain its standards? How can we best do that? It is not so much a question of how can we do it with the least pain. It cannot be done without pain and trouble which restriction always brings. The only question is: what is the best policy which will bring us safely into harbour?
The Chancellor told us about the fall in our exports to the United States. I suggest it was due first to high prices, and secondly to the fact that there has been a decrease in trading activities. I think those two account for the fall in our sales. Not only was there a fall-off here but also there was a fall in the other non-dollar countries. That meant there was a reduction in their contribution to the dollar pool; there was a drawing from the dollar pool by countries which were in deficit and which otherwise would not have needed it. Thirdly, there was no fall in the price of some of our imports and that, as the Government know, must be due to a very large extent to the long-term contracts they have made.
Then, finally, it was due to loss of proceeds on exports from the sterling area to the dollar area, due to more exchange of transferable sterling for dollars; and that led, of course, to the losses of gold to Belgium, Switzerland, and the Bizone, due to the transfer of sterling to them from other countries. These were matters mentioned by the Chancellor of the Exchequer when he explained what happened when he arrived at the meeting in Paris. That, as he rightly said, was a minor matter, and on Sunday he properly referred to it as an aggravation of a deep-seated maladjustment.
What is proposed at the moment? Only these further restrictions. I agree that, for the moment, we have got to submit. It is the only way of dealing with the present position. However, I was glad to hear the Chancellor say that these restrictions should be limited to the shortest possible time. What I am anxious to know is: What is the policy that will lead us beyond the shortest possible time? And what is going to happen afterwards? We did not hear a word from the Chancellor today about what we


should do with regard to the war debts which have brought us to this sudden crisis, as he knows, by the drain of gold from the non-dollar countries, the conversion and the leakage that are taking place.
I wonder whether the House remembers what these are? These are the heavy war debts that we incurred in order to maintain the freedom and safety of the world, when we bled ourselves white, not only on our own behalf, but on behalf of the world. When the war ended the amount that was owing by us to those other countries—non-dollar countries—amounted to something like £3,500 million. We undertook to America that we would control those sterling debts. We undertook that, as the Chancellor knows, before they would lend us even that 1,000 million dollars. We have failed to control them, and it is because of our failure to control them that we have this immediate crisis.

Mr. Ellis Smith: The right hon. and learned Gentleman has used those figures before, and has stated how America and the rest of the world were in debt to Britain for our enormous effort during the war. Is he aware that the "Statist" analysed a previous speech of his and the figures, and stated that the position was much more serious, and that America and other countries owed Britain even more than the right hon. and learned Gentleman had said in his previous speech?

Mr. Davies: I am much obliged to the hon. Member. He and I have made that point before in the House. However, I do not want to deal with that. I am dealing now with the sterling debts which are still owing by us. Because we have not exercised that full control over them, they have brought about this sudden depletion of our gold reserves. There is only one way of dealing with the problem. We have blocked them to a certain extent. We have not blocked them fully. The right thing to do is to freeze them now. Let us be honest and say to all that we cannot pay, that they were war debts incurred on behalf of all. That is the only way to get back into our ordinary trading position.
Let us say to these other countries, "You are all the time drawing upon us for something we did years ago during

the war." Let us be perfectly honest and say, "Though we are freezing them, we will refund you. We will pay you interest, but we cannot pay the amount in full." It may be that we may allow them discount, but on one condition, that the terms of repayment from this country should not be altered. If we were to do that, and only if we were to do that, would I say we were getting back to a proper position. Then, and then only, could we allow the £ to find its proper value.
I do not think that there would be great wrong. The world has not been accustomed to trade in dollars; for 150 years and more the world has been accustomed to trade in sterling, and the world knows sterling. There is a resiliency and buoyancy about it which will bring it back to its proper position. It is in that way and that way only, as the right hon. and learned Gentleman knows, that we shall find a long-term policy. I hope that that is what the Government will put, not only before the members of the Commonwealth, but also before the United States of America and other countries of the world. We shall not be alone. Others will quickly adjust themselves to us. It will not make any appreciable difference, perhaps, for the time being, but at any rate it will open the channels of trade once more, and we shall get this great country looked upon not only as a great trader but as the one that makes all the contracts for other countries, the one they can always trust as being the great medium of exchange for the world. I should have liked to hear from the Government what their longterm policy is. It is because I have not heard it, that I am so grievously disappointed today.

5.56 p.m.

Miss Jennie Lee: I was encouraged in the last few moments of the speech of the right hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies) the Leader of the Liberal Party, when, at last, he turned to deal with some of the concrete problems before us, because until then I felt he had receded entirely into romantic, nostalgic, diehard Liberalism. I do not think anyone of us in any part of the House would disagree with the ideal of a free trade world in which there were no tariff walls, particularly in America. But, we should be very irresponsible


indeed on the Government benches if we had nothing more immediate or practical than that to offer at this moment.
I listened with rapt attention to the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), because we must assume, as he was speaking officially on behalf of the Conservative Party, that he had had the advantage of consultation with his colleagues, and that we could expect, therefore, a responsible statement. Maybe he was unfortunate in following the Chancellor of the Exchequer. Maybe that made his contribution seem even smaller than it was. But I am bound to say that, having taken as I did, the most careful note of his thesis, he had not—and I should be glad to be corrected if I am being in any way unjust—he had not, so far as I could see, one single substantial contribution to make to the solution of the problems we are discussing.
The right hon. Gentleman ended with a sneer at the welfare State, and talked about extravagances and follies in Government expenditure, cunningly avoiding saying what particular items he was referring to. In the middle of his speech he gave us a three-point policy. "Reduce Government expenditure." That was the first item. Again, he did not tell us what expenditure ought to be reduced. This becomes monotonous. We have those general remarks made again and again from hon. Members opposite. Again and again they say, "Reduce Government expenditure."

Viscount Hinchingbrooke: Hear, hear.

Miss Lee: I accept that from the noble Lord, because he is an exception on the benches opposite in that he does believe in his Conservative Party, he does not try to manœuvre into some kind of coalition, and he has the courage to say in his speeches that he would like to see the social services cut. Most speakers on his side of the House do not talk in such plain terms, and certainly the right hon. Member for Aldershot did not do so today. He talked vaguely of a reduction in Government expenditure. He made his party point about arresting nationalisation.
I wonder if the right hon. Gentleman really believes that we can help to solve any economic or any political problem

by undermining the confidence of the people in their Government's fulfilling its election pledges. I pause for a moment to say that if hon. Members opposite disagree with me they should now say so, because if there is one dangerous sickness—or, if you like, deep maladjustment—that can do irreparable harm in the whole world, it is when ordinary people in a democratic country go through all the processes of a free election, freely decide the policies they want carried out, and then find that their Governments are not doing everything in their power to carry out those policies.

Mr. E. L. Gandar Dower: The tied cottage.

Miss Lee: We are even untying the tied cottage.
The third point made by the right hon. Member for Aldershot was that we had to restore confidence in the £. Splendid! But not one single word of recognition or credit did he give to the Chancellor for the distinguished way in which he has advocated the cause and policies of our country in doing just that—in maintaining confidence in the £—against all the threats of devaluation. Let it be remembered also that if some hon. Members opposite were a little bit more patriotic when they are talking to their American friends, in particular—

Mr. Harold Davies: Especially when they are abroad.

Miss Lee: Especially when they are abroad. If only they did not go round the world, all the time preaching a doctrine which is morally indefensible and economically illiterate, to the effect that our difficulties in Great Britain are due to what they sneeringly call "the welfare State."
Would it be too much, in an assembly of this kind, to ask that we should try to clear our own minds on the distinction between how we distribute the wealth of a nation internally and how we settle our external obligations? In addition to hon. Members opposite their high priest of gloom, Mr. Geoffrey Crowther of "The Economist," goes off to America, and from reports that come back to me from many sources he is deliberately creating the impression that Great Britain has its difficulties today because we are a welfare State, and the Americans are, for instance, paying for all the wigs, free teeth, medical services and the rest.

Mr. Gandar Dower: Hear, hear.

Miss Lee: Does the hon. Gentleman really say. "Hear, hear?"

Mr. Gandar Dower: Yes.

Miss Lee: Then I hope that if I explain this elementary point to him the explanation may travel even a little further afield. Even before this Labour Government there were in Britain doctors, nurses, hospitals, chemists and opticians, and medicines were supplied. But the cost of those things was borne by the sick persons when they were ill, and when hon. Gentlemen opposite now talk about the cost of the medical service, the only item that can legitimately be included as extra is the increase in cost now as compared with the past.

Mr. Gandar Dower: If I am asked whether there has not been a tremendous increase, and in a large sense an unnecessary increase, in the cost of these services, I would point out that £25,000 was paid to one dentist in Scotland in 11 months.

Miss Lee: I thank the hon. Gentleman for making the point, because it enables me to say that when the Opposition talk about waste, there are certainly all kinds of items which we bring right out into the light of day, and are corrected. So much for the smaller points, But nevertheless, it would be helpful if the Opposition would also assist in making it known to the world that the administrative cost of this service is 2.1 per cent. I believe that on one reckoning it is 2.3, and not many business firms could compare favourably with even that figure.
When the hon. Gentleman interjected, the point I was making was this. So far as I can calculate—and it is difficult to make an exact analysis—the additional cost of the Health Service now compared with what it was before, is between £50 and £60 million. Therefore, the rest of that money represents a redistribution of income within this country rather than anything affecting our balance of trade with America. I am glad that the right hon. Member for Aldershot has now come into the Chamber, because I wish to mention one point on which I can agree with him. He very properly said that if there were no tariff walls to contend with in America—remembering that America itself is the largest centre of manufactured goods—we might hope to increase our sales there

by £40 to £50 million sterling. I think that was the figure he used. Obviously, he is talking of a "never-never" situation.
The Americans are not going to remove their tariffs, so I would have discarded that point as rather too unsubstantial to be worth following through, except for the further point he made. Apparently the right hon. Gentleman thought that he was helping to clarify our discussions by saying that at one time we complained about American prices being too high and said this was the source of our difficulties, and that in another phase we complained about American prices being too low. Certainly the right hon. Gentleman ought to know that we are in difficulties because the American economy is an unplanned economy; it is a capricious economy; it is an economy with which it is exceedingly dangerous for a country like our own, which is trying to plan and organise its resources, to have dealings. The fact is, if there had been the same increase in the prices of our imports from America as there was in the prices of our exports in 1948 compared with 1938, instead of having an adverse balance of trade on visible exports of £218 million we would have had a favourable balance of £40 million.

Mr. Ivor Thomas: "Never-never land."

Miss Lee: I do not think it is a "never-never land" to try to say a little to our good British people about what is happening and just how much they have done, and to try to find out the source of our troubles and how we can cure them. I have been diverted from my argument by the hon. Gentleman, but let me add for the record that we ought to remind our people that, although since 1945 we have received some £1,400 million from the United States and Canada, including Marshall Aid, we have been responsible for aiding other countries to the extent of approximately £900 million. I think that is pretty wonderful, when we compare the relative populations and the relative resources of our two countries.
I do not think there need be any hangdog atmosphere about this Debate this afternoon. We are in our dollar difficulties, as every one of us knows, because during the war, in a common fight against Fascism, we exhausted reserves of every


kind, so that there is not just a British problem but also an Anglo-American problem—and indeed a world problem—in seeing how we can, not by the people of one country hurting the people of another country, but by plans for our mutual advantage, get a little sense into our international prices and international relations.
I now wish to draw to the attention of the House what I consider to be one of the most important, sane and optimistic statements that has come out of America. We keep talking about the Americans as if all Americans were of one point of view, whereas the real argument that is going on is not between the Americans and the British, but between some Americans and some of us who are like-minded and hon. Members opposite and their reactionary friends over there who are also like-minded. It is very important that the ordinary working family in America should realise that the interests of the American workers and the British workers are not in conflict. What is good for them is good for us.

Mr. Ellis Smith: And for the whole world.

Miss Lee: Yes. Nothing can be more despicable than at this moment to try to tell some of these four million unemployed Americans—if we take in the half-employed and the self-employed, there is reason for believing that that is a very conservative estimate—that the reason why they are in this extremity—we have to remember that many of them are married with families, which perhaps brings the total up to 10 million—is because an idealistic, generous and extravagant American Government has been sending money over here to supply us with teeth and wigs.
If I can do something to get rid of that impression I shall be very glad, because the American workers themselves, through Mr. Philip Murray, the President of the C.I.O. [HON. MEMBERS: "Oh."] Do hon. Members have something to say, or is it a snarl under their breath? I hope there is nothing improper in quoting a statement put out by the president of a very large and powerful trade union, with 40 national unions stretching from coast to coast. The president, who is dealing with the men who are suffering from unemployment and wage cuts, tells

them that the way to deal with this present world situation is to see first that if the American worker is out of a job he has better unemployment benefits. He goes on to emphasise the importance of the American Government introducing work projects at a time of recession, particularly housing projects, and thus maintain full employment.
What is wrong with that? I said it would be a very serious thing for us, having made promises to our citizens, if we had run away from those promises when we were elected, and I say, with all respect to our American friends, that it is also very serious for an American Government if, having fought an election and made definite promises to the people about full employment, they run away from those promises. The root of the whole problem is American production, which has now become so colossal, about three times what it was before the war. American production is now so vast that Europe, ourselves, and the American workers are menaced by the fact that wages in America are too low and American social welfare work too primitive. We are always told about the high wages in America. Of course there are some workers with high wages, but when we are dealing with wages what matters is the proportion of the total amount that goes back to the population, either directly in wages or in education, health services, housing projects and the rest.
The most encouraging feature of the American situation is that we have a President there who at least wants to carry out his election promises. Some of our most influential friends in America, who in no way share my Socialist point of view, will feel ashamed if America runs away from her promises to the world to be responsible for maintaining full employment in America. I say to our American friends: "To thine own self be true," and then they can do no harm to us or anyone else, because in this C.I.O. seven-point programme, which I hope Members will look for in the British Press, although they will need a large microscope and a private detective service to find it—

Sir R. Acland: Read it to the House.

Miss Lee: Very well. Briefly, the first point is increased unemployment benefits; the second increased and extended public


assistance; the third is to give tax relief to the lower income groups, which sounds awfully like what the British Government has done; the fourth, to develop public works, particularly housing, which is so desperately required; the fifth, an increase in the minimum wage; the sixth, to grant allowances to new and small businesses; and, lastly, to pay transport costs to points where work is more readily available, which is the same thing we are doing over here where we are transferring British miners from Lanarkshire to Fife-shire.
Mr. Philip Murray goes on to say that the real source of the difficulty is that unreasonably high prices and exorbitant profits are exacted by big business in America, which forces the American people to cut their purchases because prices are too high and incomes too low. On the most careful and scrupulous calculation, I am satisfied that it would be possible for the Americans to bring down their prices, both for their own people and for our people. The American Minister of Agriculture, who must have noted once more what is happening over here, is asking that farm prices should be subsidised in such a way that there is a living for the farm population without all the costs going on to the domestic and foreign consumers.
I say that when we were faced with a very serious situation at the beginning of this Parliament, I was extremely doubtful about tying up our interests with America in any way. I modified my views when the Marshall Plan came along, and particularly after the election of President Truman, for it appeared that the American people were catching up with our ideas of the welfare State. I thought they were seeing the importance of full employment and rising standards of living within America, which would have had every kind of beneficial effect for the rest of us as well. It is very hard if the Americans are now taking back with one hand what they have given with the other.
I regret what our Chancellor had to say about cuts in tobacco, timber and other imports from America, because I know that means hardship for many Americans. It may mean unemployment for many Americans, but let us make it clear from this country to the American

people that our interests do not conflict with theirs, and that if only they could try to control the greedier and more socially irresponsible elements in their capitalist society, it will be possible for us to go on in terms of deepening friendship and trade. On the other hand, no proud nation, certainly not this nation, can go on indefinitely being lectured by the Americans and having all our plans interfered with because of the capricious economy of another country.

Mr. Michael Astor: Why should this be one-sided. Why should the hon. Lady not like the Americans to criticise us, if she is prepared to criticise them and think that they like it?

Miss Lee: I know the Americans well enough and get on well enough with them to know that they prefer my plain speaking to much of the mealy-mouthed messages which go across to America. The sort of things I am saying are precisely the sort of things that the Americans understand. They do not hesitate to talk frankly to us, so let us talk frankly to them.
If we cannot see sanity in the internal American economy, there is nothing possible for us to do but that we should go on, not to diminish bilateral trade, but to expand bilateral agreements within the Commonwealth, with Eastern Europe as well as Western Europe, and with Russia as well as in North and South America. There ought to be no corner of the world or no peoples excluded from these schemes. In a world where we want our own standards of living to be maintained and improved, we have got to think also of the standards of other people. It is a bit romantic for the Leader of the Liberal Party to think in these days that we can simply buy in the cheapest market and sell in the dearest. In a difficult and divided world it is necessary to see that not only our own country has its essential foods and raw materials, but that we try to sustain the standards in those other countries that supply them.
Finally, I would ask, are our Tory friends both here and in America completely crazy? What do they think they are doing at the present time, when in America there is an enormous anti-Russian campaign going on, an enormous dread of the spread of Soviet power and


endless condemnation of dictatorship of the police State, while at the same time there seems to be both here and in America an insufficient recognition that the one country on this side of the Atlantic, which is most fully sustaining the hopes of orderly constitutional progress not only of the people here but of America and of Europe, is Great Britain. If our Socialist economy in its democratic setting can sustain our people by a policy of fair shares for all, however modest the level, then there is no fear of either Fascism or Communism. But if we lift the "Sunday Express" and papers of that order, we read about the most wonderful food to be got in Germany. Of course it can be got. We read of the wonderful time to be had in Belgium. Of course we can. But the Belgian unemployed do not share it. All over Europe at the present time there is a growth of either Fascism or Communism, the growth of the parties of depair and of dictatorship.

Mr. Boothby: No.

Miss Lee: The hon. Member says that it is not true. I should like him to substantiate that.

Mr. Boothby: The hon. Lady has only got to look at the recent elections, and in particularly the election in Belgium, to see that there is no evidence of any growth of Communism at all.

Miss Lee: I have looked at recent elections, and I have studied the reports given to me by the leader of a great Socialist Party on the Continent, who, the other day, analysed in detail for me the movements of opinion in Germany, in France, in Belgium, in Holland, in Italy and elsewhere. Wherever there is in the modern world a community in which the ordinary people are pushed aside, are unemployed, are under-nourished, under-housed and under-doctored, while at the same time they see excessive wealth on the surface of society, then there is a danger of Fascism or Communism.

Mr. Beverley Baxter: The hon. Lady should look within the Commonwealth, and she would see how in Canada the other day, the Socialist Party, no doubt as a result of the Canadians studying conditions in this country, was wiped out—

Mr. Michael Foot: So were the Tories.

Mr. Baxter: Just as in France the De Gaullists and the Communists are losing.

Miss Lee: The hon. Member can enjoy the recession in the position of the Canadian near-Socialist Party in the meantime, but what I am saying is substantially true. I do not want to talk about Canada or the Empire because we on this side of the House have already in terms both of our economy and our political relations with our people in the Empire, come much closer to them in the main than is the case with hon. Members opposite.

Viscount Hinchingbrooke: Where is the evidence of that?

Miss Lee: I repeat what I said, that in Germany and in many of the most important parts of the world today there is to be seen the growth of Communism and of Fascism—of the parties of despair—and they cannot be answered by going back to laissez faire capitalism, where public opinion is shocked by great excesses of wealth and poverty. The same progressive elements among the American people, which in the main elected President Truman, and the great organised American Trade Union movements along with the main currents of opinion in our own country are the best hope offered our tormented world. There is no need for gloom if we can use our rising production figures as a basis for fairer distribution of the wealth of our world both within countries and between countries.

6.26 p.m.

Mr. Boothby: I found myself in agreement with most of the first part of the sentences in the speech of the hon. Lady for Cannock (Miss Lee), but not with the second part of those sentences. She seemed to open her arguments very well, but then she reached a different conclusion from what I would have done. I have detected a considerable swing to the Right in recent elections on the Continent, and I have not detected any great increase in Communism. But then I am only going by the figures. Psychologically there may be some spread of Communism as well. With regard to her references to the United States, if one sponges on people, and is


apparently prepared to go on sponging indefinitely, it is only reasonable to be polite to them. We are at the moment being kept by the United States of America to a very large extent.

Mr. Foot: That is not right.

Mr. Boothby: Certainly—where would we be today without their aid?

Miss Lee: I ask the hon. Member for East Aberdeen (Mr. Boothby) to be more responsible. It is exactly that kind of statement which goes back to America and gives the unemployed in America an impression that there ought to be less and not more aid to Europe, and in that way they would be better off, whereas in fact they would be very much worse off if E.R.P. were reduced.

Mr. Boothby: It is in the interests of the United States of America to look after this country and the other countries of Western Europe, but we should be in a pretty mess at the present time if Marshall Aid had not been given to us, and I do not see why we should not say so. The hon. Lady complained bitterly that we were subject to criticism by the United States; but they have every right to criticise us, and they will go on having that right so long as they continue to subsidise—if hon. Members opposite prefer that word to "sponging"—us and keep us. It is only a matter of a phrase.
It is very much better that we should face up to the fact that, although we are being governed by a Socialist Government, we are at the present time, and have been for a long time past, kept by the greatest capitalist country in the world. I do not see why we should not say so. It is true. It pays them to do it, and it pays us to take it; but for my part I hope it does not go on for ever. What I am worried about is the complacent view of the party opposite, who seem to regard dollar subventions as something that should go on for ever and ever.

Mr. Foot: The hon. Member used the word "sponging" a moment ago. Could he tell us the precise date when this country started sponging on the American people? Would he apply that term to the aid which we had from the United States, which was just as substantial, during the period from 1940 to 1944?

Mr. Boothby: Not in the very least. The hon. Member knows that I was using that as an illustration. I thought that the hon. Lady was pretty rough in her treatment of the United States, and I said—by way of illustration—that if you sponge on somebody you may as well be polite. I think that is a reasonable thing to say. Why do we flinch from this issue? Does any hon. Member deny that we are receiving gifts that go on, month after month, and year after year, from the United States? So long as that position continues, the United States will be entitled to criticise us.

Mr. Ellis Smith: May I—

Mr. Boothby: No, I cannot give way. I have an enormous speech to make. Let me come to this great oration which I have prepared with such care. In the course of it I shall answer some of the arguments of the hon. Lady, and also the arguments of the Leader of the Liberal Party. With one exception, which was when he was talking about restrictive practices, I was in total disagreement with him. I have the greatest regard and affection for him as a politician, but we were far apart today.
It is not true to say that our present situation is merely the result of the transfer of economic power from the old world to the new, or, as the famous Chequers statement said, "the aggravation of a deep-seated maladjustment." That phrase evoked the admiration of the Leader of the Liberal Party, but it made me feel faintly sick. This cause of our trouble, as the Chancellor of the Exchequer pointed out, has been going on since the beginning of the century, although it has been aggravated by two world wars. But our situation is also the result of the economic policy pursued by the present Government during the last four years. We can all see now that that policy has completely broken down in practice. I do not think that it is possible to deny it.
It is intolerable for hon. Members to quote their own speeches, but, since the American loan has been mentioned frequently in the Debate, possibly hon. Members may remember the Debate which took place on 12th December, 1945, when the hon. Lady the Member for Cannock and myself were in close agreement. In the course of that Debate, I made two propositions. I said:


The first is that multilateral trade and free convertibility, to which this Agreement admittedly commits us, are impractical in the modern world.
Then I said:
My second proposition is that we cannot have a planned national economy with international economic anarchy. … The next time that an American slump comes … His Majesty's Government are by these measures, depriving us of every weapon by which we might protect ourselves from its most dire consequences.
I concluded by putting forward an alternative, which was this:
It is the alternative of the sterling bloc, based upon the British Empire, and fortified by the countries of Western Europe."—[OFFICIAL REPORT, 12th December, 1945; Vol. 417, c. 405–407.]
That was a very long time ago; but at least I put forward a policy which had a theme, and a coherent theme. It demanded four things. It demanded increased productivity on the part of this country, and in the sterling area generally. It is not enough simply to produce goods in normal times. It is also quite important to be able to sell them. The policy further demanded an extension of the system of Imperial Preference; a close co-ordination of our national economy with the economies of the countries of Western Europe; and, most important of all, a restoration of confidence in sterling. There, at least, was a policy and a theme.
What have the Government done? Let us take those four points in turn. First, productivity, which is output in relation to costs. Hon. Gentlemen opposite, or some of them, and particularly the hon. Member for East Coventry (Mr. Crossman), are now trying to wish on my party the desire to bring about unemployment and to lower real wages. That is not true. The party to which I belong has never suggested that we should deliberately induce unemployment, or lower wages. We want to avoid that. I go so far as to say quite frankly that no amount of cost-cutting and price-slashing will enable us to export manufactured goods in very large quantities to the United States ever again. To pretend otherwise is gross wishful thinking, and I hope that the President of the Board of Trade will stop it. He goes on jawing about the goods that we are going to export to the United States. What my right hon. Friend the Member for Alder-

shot (Mr. Lyttelton) said on this subject was absolutely true. It is like what used to be called sending coals to Newcastle.
The United States want a lot of things, but manufactured goods are not one of them. They want specialities such as whisky or high-class tweeds and other articles like that, which we can supply very nicely from Scotland. By and large, they do not want manufactured goods in large quantities, and they will not take them. We are now exporting to them only at the rate of about £3 million a month. The real cause for anxiety is that we are ceasing to be competitive in non-dollar markets at the present time. We are therefore quite right to stress the importance of productivity. This argument is supported by a very interesting document, which has not yet had the circulation that it ought to have had. It is called "The Economic Survey of Europe, 1948." It was published the other day. It says:
In itself the restoration of equilibrium in foreign payments will not contribute to the raising of living standards; it is even possible that, in the process of restoring financial solvency, standards of living might have to be lowered. The more fundamental problem of the European economy is the increase in the productivity of industry and agriculture which alone could satisfy the universal desire for better standards of living.
That is true. Therefore, when hon. Members complain, as they have done in this Debate, that we lay too much stress in this party on the importance of productivity, I hope they will see that we are absolutely right.

Mr. Cecil Poole: Would the hon. Gentleman quote further from the same document and give the figures relating productivity in this country to the wages paid?

Mr. Boothby: I am going to give plenty of figures from this document.

Mr. Poole: Can we have those?

Mr. Boothby: At this moment, no. If the hon. Gentleman knows the figures that he has particularly in mind, then he should not ask for them.
What have the Government done about this matter? They took office, to find the accumulated wealth of a century destroyed by two world wars, and the country heavily in debt. Instead of concentrating on the question of national productivity, as the number one priority,


the Government chose to construct an elaborate welfare State, which has consumed during the past three years a great deal more than we have produced. I am not against a welfare State in principle; but I do not think that we were in the position to construct this particular kind of welfare State until we had restored our productivity.
The Government used the post-war boom, caused by universal shortages, and the American loan, to conceal the realities of our situation from the British people. That is what I do not like. They lived riotously on borrowed dollars, to which they had no intrinsic right, because no one owes us a living—least of all that kind of living. That great economist the Chancellor of the Duchy of Lancaster had progressed sufficiently in his studies to apply the remedies proposed by Keynes for an endemic world deflation to a rip-roaring inflation. It was like a doctor who diagnoses high blood-pressure as pernicious anaemia and prescribes port wine instead of salts to the patient. That was what the Chancellor of the Duchy of Lancaster did, greatly aggravating the inflation in the process, Just because the present Chancellor of the Exchequer leapt on to the footplate of the national engine and pulled over all the levers to prevent an almighty smash, he is hailed as a great exponent of sound finance. But what has he actually done?
Admittedly, the quantitative output of British goods has increased, but so has the cost of production. Why? We say, and we are right, primarily because of the colossal Government expenditure and the crushing burden of taxation. It is no good pretending that a taxation rate of over 40 per cent. of the national income is not a factor in the cost of production. No economist will agee with that contention, The Chancellor of the Exchequer tries to deny that taxation is a factor in the cost of production. I say—and I remember that the Minister of Health once agreed with me, although he may prefer to forget it now—that no economy, Socialist, Communist or Capitalist, can sustain indefinitely a burden of Income Tax between 9s. and 10s. in the £. I say that no economy can function efficiently under a level of direct taxation as high as this indefinitely; and I

deny that it does not enter into the cost of production, because I am certain that it does.

The Minister of Health (Mr. Aneurin Bevan): Is the hon. Gentleman quoting me? Surely it is not something which I said in public?

Mr. Boothby: It was the general inference which I drew. I am not quoting a passage from a speech by the right hon. Gentleman, but I have heard him express the view that no economy—

Mr. Bevan: No capitalist economy.

Mr. Boothby: All right; I will let the right hon. Gentleman have that one. The Chancellor of the Exchequer has been expending the fruits of the productivity of this country before they have been earned; and it is a physical impossibility to make the future pay for current production, which can only be maintained through the expenditure of incomes previously earned. Productivity depends—I think that we are all now beginning to realise it—on hard work, adequate savings, adequate incentives, and sufficient flexibility in the national economy. In this country at the present time nobody can save; there are no incentives to work flat out, and the Government have imposed on us a rigid high-cost economy. Wages, prices, interest rates and exchange rates are all frozen.
What does this mean? It means that every single economic adjustment can only be made by the clumsy and difficult method of direct physical controls, and these controls are inevitably and necessarily restrictive in character. All such controls must be. I do not blame the Government for that; but they have now given us such an economy that there is no other method of making necessary adjustments.
We lay stress upon productivity not because we want to lower our standard of life, but because we want to maintain it. This is not a crisis of deflation like 1931, out of which we can spend our way. It is a crisis of the balance of payments, out of which we can only produce and export our way. Even the hon. Member for East Coventry, who sometimes stumbles upon the light, wrote the other day:
Keynesian pump-priming may succeed in America, with its huge domestic market; but


it cannot ward off disaster for more than a few months in a country which has to export in order to buy its food and raw materials.
He wrote on:
In Margate, in 1947, the conference"—
the Labour Party Conference—
passed a series of resolutions which were sublimely irrelevant to the crisis which broke a few weeks later. Will this happen again at Blackpool? It seems only too likely.
It was only too likely. It happened all right.
Now I come to my second point, which is the extension of Imperial Preference. Having put this country in an economic strait-jacket, the Chancellor of the Exchequer is now committing himself—and he goes on committing himself in speech after speech—to a long-term policy designed to remove all discriminatory practices, to eliminate preferences, and to return to a system of free multilateral trade. I should like to know from the President of the Board of Trade how he proposes to compete successfully in free world markets against the surplus products of the United States without any monetary reserves at all to back him up during the next few months or years. How on earth is he going to do it now that the sellers' market has come to an end and the buyers' market is here, against the United States, with growing surpluses of practically every product, as a potential competitor in every market? The Chancellor of the Exchequer did not tell us this afternoon.
This is a point on which we want to try to knock some of the nonsense out of the Government. As I have said before, the Government are pursuing a policy of nineteenth century Socialism at home and nineteenth century Liberalism abroad. Both these things are highly undesirable, neither of them is suitable in the twentieth century; and they are also completely incompatible. We cannot have a so-called planned Socialist economy at home and international competitive anarchy abroad. But it is to this that the right hon. and learned Gentleman has now committed us. He says in public that he is against discrimination; but does he not realise that in a world suffering from an acute dollar shortage the effect of nondiscrimination can only be to throttle down the total volume of international trade to the lowest common level?
I come to my third point. The right hon. and learned Gentleman talked again this afternoon, as he has talked so often, about the great economic rapprochement which he is bringing about between this country and Western Europe; but any kind of integration of our economy with that of Western Europe demands, first of all, some constructive direction of production and investment in the basic industries at a high level, some co-ordination of monetary and fiscal policies, and the gradual elimination at the lower levels of trade barriers and exchange controls through the creation of an inter-related currency system. Not one of those objectives has been attempted by the right hon. and learned Gentleman up to date.
The "Economic Survey," from which I quoted just now said:
There can be little doubt that, with greater co-ordination of the investment plans of the various countries, the real return of capital investment in Europe could be considerably enhanced by increased specialisation and industrial development.
What does it go on to say? It says:
The danger inherent in the present methods of planning is that they will influence the economic development of individual countries in a more autarkic direction and thus lead to the increased economic isolation of the individual countries of Europe from each other. This is almost inevitable, so long as economic plans are drawn up separately for each national area and controls over foreign trade are operated on a purely national basis.
That is exactly what the right hon. and learned Gentleman is doing. He has not given up one ounce of effective economic control to any European authority. The Chancellor of the Exchequer pays lipservice—I suppose to please the Americans—to the principle of multilateralism, but he is being driven daily, and almost hourly, to a policy of increasing national autarky and undiluted bilateralism. Whatever he may say, that is where he is taking us.
My fourth and last point was confidence in sterling. We all agree about that. Apart from the Government and our high-cost economy—both of which can be removed and, I have no doubt, will be removed in a very short time—the most important factor—this point was well put by the Leader of the Liberal Party—undermining confidence in sterling today is the sterling balances in London, which hang like a millstone round our neck, demand a continuous flow of unrequited exports, and cause continuous leakages of


hard currency from this country. This is really a problem which could have been tackled radically four years ago. That is one useful thing which might have been done at Bretton Woods. I do not know why they did not tackle it there. Until this question is resolutely faced, I do not believe that any Government in this country will ever restore complete confidence on the part of the rest of the world in sterling. It is like a suppurating wound. No principle is applied to it. Occasionally pressure is put upon us to release a bit more; and it may well be that secret arrangements are made to obtain convertibility into dollars or gold, but as far as I can make out no principle is involved, and there has been no substantial reduction in the total amount of the balances. I blame the right hon. and learned Gentleman very much for not having had the guts to tackle the problem long ago.
Where are we going from here? I have tried, and failed completely, to discover any valid intellectual basis for the Chancellor's position or for his policy, which contradicts in practice every theory he proclaims. We could at least see what the Chancellor of the Duchy of Lancaster was up to when he was Chancellor of the Exchequer. He borrowed dollars to go for a spree and damn the consequences. At least we had the spree, and it was quite fun while it lasted. It was bound to come to a sharp end, but we had it. What about this Chancellor of the Exchequer? All his surveys have erred on the side of optimism; all his prognostications have been falsified by events; sometimes in the course of a few days. He now says that we can achieve in this country complete economic self-sufficiency and independence by 1951. I do not believe it. He pins his faith upon this great increase of exports to the United States. That seems to me to be equal nonsense. He subscribes to the view that the Marshall countries can achieve and sustain an increase of more than 40 per cent. over their pre-war exports, with the United States as a potential competitor in every market. They will not be able to do that.
A climax of absurdity was reached in the Chequers declaration which says, in one fantastic breath, that we can all go back to free multilateral trade but that there must be no devaluation of the £.

What does that mean? Where is the coherent thought underlying that declaration? Where is the thought at all? There is nothing that one can get hold of; it is just plain nonsense, and it is about time that the Government faced up to it. We are all so awed by the alleged brains of the right hon. and learned Gentleman that we are inclined to sit back and think that, when he declaims some profound theory, he must be right because he is so clever. But if one is clever, one is not always right; one can quite often come to wrong conclusions. I would rather trust stupid people—[Interruption.] I am not now talking about any of my colleagues, I am talking about myself.
In conclusion—I have been shorter than I thought but I have rattled through my speech very fast as hon. Members must admit—I say that there is no short-term remedy for the world dollar shortage. Would it not be a good plan to face up to that, instead of talking all this nonsense about short-term remedies that do not exist? If the International Monetary Fund could be persuaded to raise the dollar price of gold it would help, because it is obviously absurd to make gold the basis of international credit and then peg its price at an artificially low level, lower than any other commodity in the world. But one fundamental fact remains. The United States today are capable of producing a surplus of practically every commodity that the world requires. Their productivity has been more than doubled in the last eight years; their costs are already lower than ours; their imports in 1948 were only five per cent. greater than their imports in 1937, although their production was two-thirds larger. Just think of that.
It is a delusion to suppose that the currency of the world's greatest seller can do the same job as the currency of the world's greatest buyer in the 19th century. It is nobody's fault. It is not the fault of the Americans. It is just not possible. It is equally fallacious to suppose that a solution of our economic problem can ever be achieved by a return to promiscuous, cut-throat, competitive international trade, because we are not in a position to conduct it. The material basis of our economic economy is too small. If it is to compete in free world markets against the vast, flexible, free economy of the United States, we cannot


do it on level terms. They know it and we know it. Why not face up to it?
The long-term remedy lies in increased productivity and trade in the non-dollar area; and, of course, in extensive capital investment abroad by the United States of America. If they are to do this, we have to give them something worth while to invest in. Do you think, Sir, that the right hon. and learned Gentleman offers such a tempting bait in this country for investment on the part of the United States? I do not think so. Do you think, Sir, that, in isolation, all the petty little national economies of Europe offer a tempting prospect for the investment of dollars on the part of the United States? I believe that a revived sterling area would and could provide a field for such investment: and that until this is achieved we can never hope to come to a good arrangement with the dollar area, or restore any kind of genuine equilibrium between the old world and the new.
Whenever I go to universities I am struck by the fact that the younger generation in this country are beginning to lose faith in everything. They are certainly losing faith in Socialism. Too many of them no longer believe in anything.

Miss Lee: You are getting old.

Mr. Boothby: No, it is the younger ones, and that is what bothers me. As we get older, our faith increases. My own increases hourly. It is better, on the whole, to believe in something than to believe in nothing; and I am an unrepentant believer in Imperial Preference and in the preferential system generally. It is flexible, and it can be applied not only to the Empire and the Commonwealth but also in Western Europe, and the dependent territories of Western Europe. Further, I believe that the creation and development of regional economic systems is an essential prelude to any kind of global system.
Therefore, I think our first task is to use our commercial experience and our special position as the political centre of what is still a great Empire—in spite of the Government—and the financial centre of the sterling area to create a new system of reciprocal multilateral trade within that area. It involves increasing our productivity, restoring confidence in

sterling, the co-ordination of monetary policies, the negotiation of trade and payment agreements, the establishment—for the time being and for the emergency—of a dollar pool, the abandonment of the obsolete doctrine of non-discrimination to which the Chancellor has again committed himself, and the extension of the preferential system. It involves, in fact, the direct antithesis of what I must call the Cripps policy.
Meanwhile where are we? We are in this position, that the right hon. and learned Gentleman has imposed a rigid, planned, high-cost economy on this country, and is at the same time committing us, in theory if not in practice, to the most relentless competition in free world markets that we have ever had to face in the whole course of our history, with practically no monetary reserves, and with about one-tenth of the wealth which we possessed in the nineteenth century.
I cannot see any possible way out of our problem along these lines. It is absolutely crazy. The document issued at Chequers the other day again commits us to that policy. We cannot do it. We cannot have a rigid high-cost economy and at the same time embark upon free competitive multilateral trade. Therefore, I say that there is not the slightest chance of this country emerging from its present difficulties until we get another Chancellor of the Exchequer, and another Government which will restore the confidence not only of the United States but of the whole world in this country and in, its currency.

6.58 p.m.

Mr. Stokes: I find myself in disagreement with the hon. Member for East Aberdeen (Mr. Boothby) to an extent that is rather unusual for me. With many of the things he says on economics and trade I often agree, but today, apart from regarding his speech as a criticism of the Government, which it was, I did not see that he gave us anything very constructive to go on. When the hon. Member talked about "sponging" upon America, I agreed with the hon. Member for Cannock (Miss Lee) that it was the most mischievous thing to say. And it is not true. It is all very well to say that at this moment in terms of monetary symbols America is supplying facilities whereby we can continue


to enjoy a certain standard of life, but it is wrong to say that without having regard to the background against which it happened.
We all know what happened in the war. We accepted Lend-Lease and abandoned all our export markets. We were not allowed to use material for making goods for export. The whole effort was concentrated on the war effort. The intention was that Lend-Lease should go on after the war ended. But what happened? The supply was turned off at the tap. There were bound to be four, five or six years of restoration period during which America, as the big creditor, was bound to supply the wherewithal to the people who were all do debt because they had blown everything skyhigh in the war effort. I do not call that "sponging" but pooling our resources after the cessation of hostilities in order to get the world on its feet again. To call it "sponging" is mischievous, and it is a statement which causes much damage among ordinary people in America.

Mr. Boothby: The hon. Gentleman has just said that the Americans are pooling their resources with us and giving us monetary symbols. Why should we not face that fact?

Mr. Stokes: I am not arguing at all about whether America is generous or not. I think that the Americans are a marvellously generous nation. But what I say—I have said it again and again, and I do not think anybody else will deny it—is that Marshall Aid works both ways. It may certainly be getting Europe out of its difficulties, but it is certainly helping America to avoid getting into the greater difficulties which would arise but for Marshall Aid. Surely, it is not unfair to say that. The more often it is said, perhaps, the sooner the general public will begin to understand it. Of course, the general public in America regard themselves at present as indulging in a one-way traffic. That is because there is so much misrepresentation about it. If people could really understand what the truth of the matter is, and if it was being constantly rubbed into them—which the American Press does not do, from what I know of it—we should find a very different attitude among the ordinary people there.
The hon. Member for East Aberdeen said that it was wrong to foist on to the party opposite a desire to get back into power and then bring about an era of unemployment and lower wages. He said that his party were never going to do that "intentionally." But that is just the danger—we never suggested they would do it intentionally; that is precisely what has happened in the past and it is precisely why they will not get back into power next year.
The hon. Member spoke about productivity and said that our productivity had not gone up. I did not come to the House today in order to produce a balance sheet of trade or production; no doubt, the President of the Board of Trade will answer that. But so far as I know, our productivity is vastly in excess of what it was in 1938. It may not be as much in excess of what we should all like it to be. It may not be as much in excess as is necessary to raise the standard of living to the height to which we want to get it—that may be true; but to put about that our productivity is lower or is not any better than it was, is just arrant nonsense; it is not true.
I want to deal with a point which was made by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) in opening the Debate for the Opposition. He referred to what he called "the colourless statement from Chequers." I wonder sometimes what people expect in these statements. First, they expect a statement—they do not like it if there is no statement; I never did. I always wanted to know what the right hon. Gentleman the Member for Woodford (Mr. Churchill) was up to, although he did not by any means always tell me. I thought that the statement from Chequers was on the whole rather good. The Chancellor was, no doubt, handicapped by the fact that he has very important negotiations now taking place and cannot be too explicit; but that statement, it seemed to me, had three very important points.
First, it contained a declaration that there was to be no devaluation of the £. Nothing could give more confidence more quickly in the export markets and lead to a purchasing of goods in this country than that declaration. Secondly, there was in the statement what seemed to me to be important, but what the hon. Member for East Aberdeen does not


seem to regard as so important. It contains a recognition that there are very many difficulties to be resolved and of the desirability of moving into what I call a single economy. I do not know whether that conveys to the House the meaning which I wish to convey, but what I want is a single world economy—I make no bones about it. This is not just a dollar-sterling battle; it is a great international problem and the whole world is in it. If we do not lead the world out of it, we shall get into a very great mess and so will the rest of the world.
As for the declaration by the right hon. Member for Aldershot that there is a loss of confidence in sterling, I admit that when one goes abroad now it is not as easy to change a pound note as it was 10 or 15 years ago. But I defy anybody to contradict me regarding that part of the world to which I have been—South America—when I say that the confidence in sterling improved steadily all the time I was there. Even dealings on the black market got better. After all, that is the best yardstick of all, not only in those countries but in other countries too, and I say this not in any derogatory fashion. It is not true to say that sterling is weakening all over the world. I found that it was much better. It is true that those peoples could not buy from America because they did not have the dollars to buy. At any rate, I can compete with the Americans, even if the South Americans had dollars.
The hon. Member for East Aberdeen began his speech by referring to the great Debate in December, 1945, when, unfortunately, the Government did not take the advice of the mixed bag of unexperts of whom I was one, who went into the Lobby against the Bretton Woods Declaration. I do not see that any new situation has arisen since 1945. The situation today is pretty well the same as it was then. In some ways it is better—it has improved, we have got further away from the war and things have sorted themselves out a little—but the financial and economic difficulty is just the same now as it was then; but it might have been a great deal better if our advice had been taken. I do not want in any way to be unctuous about it, but I cannot help feeling how right we were in the first place to protest against the loan, which, I repeat now, we are never going to

repay. That is what I told all my American friends to try to stop them from lending to us. The only way we can pay it back is by America taking goods, but America does not propose to do so and, therefore, it will never be paid back.
We insisted at the time that the solution of the problem was in the export of coal, steel and capital goods; that there was no hope in the consumer goods market; and that we could not compete with the competition which was bound to arise when Italy and Japan were put on their feet again. We protested against the importation of films and tobacco from America, but nobody took very much notice. The extent to which tobacco is being imported is still excessive. As for films, I cannot discover the figures; I am told that they are on the secret list, and the Board of Trade will not tell me what they are. I shall return to the attack. Finally, we insisted and prophesied correctly that a return to the gold standard would once more prove disastrous. All the pundits tried to persuade us that we were not returning to it; it was all a complete quibble. We all agreed that it was not the gold standard of 1939 or 1914, but it was a gold standard nevertheless, and we said that the sooner we got off it the better or, at least, if we got on, the sooner we valued gold in the right way the better it would be for all of us.
In my view, the Chancellor in his opening speech today was over-optimistic. I do not view the immediate future very optimistically. Here, again, I understand the Chancellor's difficulty—I have never been Chancellor of the Exchequer—

Mr. Norman Smith: You will be.

Mr. Stokes: That may be—that in his remarks today at the Box he was restricted by his negotiations. Surely, therefore, it is up to back benchers to say some of the things he could not say, and I propose to say them. Whether the Chancellor would have said them if he were a back bencher will always remain problematical.
There are three lines of policy we must follow, and I propose to devote the rest of my speech to suggesting the things which should be done rather than indulging in party nonsense. I divide those


three lines into a short-term, a medium-term and a long-term policy. My short-term policy is this: we must concentrate on the increase of production of capital goods, of coal, and of steel. In my view there is absolutely no way out or no method of closing the export gap effectively except through those three means. They demand, first, improved efficiency; secondly, we must have more men available.
Here I wish to make a few remarks about conscription. I think that our present method of running the military forces is absolutely "crackers." One hundred thousand young men are taken every year just at the time when they are most wanted "to get their eye in," in industry. They are shoved into an Army which does not want them because it wants to get rid of them as soon as possible—it only keeps them for a year or so, anyway. They ruin the Army; they are no use as soldiers, and when they have finished their service they come back to industry, or do not come back, as the case may be, and industry is handicapped. I suggest to the Government that we should chuck conscription and that we should have universal Territorial service for three weeks or a month a year for everybody between the ages of 18 and 35. We should thereby get a better Army and more recruits into industry.
Thirdly, I want to say a few words about absenteeism, and in doing so will my miner friends please understand that I am not criticising the miners; I am criticising the Coal Board. The Coal Board supplied me recently with some figures—I cannot understand them if they are true—and said that voluntary absenteeism at the face of the mines is 7.68 per cent. and involuntary absenteeism 6.45 per cent., or 14 per cent. overall. A 7 per cent. difference in attendance at the face represents 14 million tons of coal a year; 14 per cent., therefore, means 28 million tons. I want to ask the Government to explain if voluntary absenteeism in the mines is measured in the same way as voluntary absenteeism in any other branch of industry. If it is not, it ought to be said, and if it is, the miners ought to be chased up in it.

Mr. Emrys Hughes: Oh, rubbish.

Mr. Stokes: Of course the hon. Member for South Ayrshire (Mr. Emrys Hughes) has not listened to what I have said. I do not want to put anyone down a mine. I think it is antiquated and the sooner we can stop it the better for everyone concerned, but now we cannot. Some works in my area have absenteeism of only 3 of 1 per cent. Whether it is true or not that voluntary absenteeism in the mines, on which the whole of heavy goods industry depends, is as high as 7 per cent., if the method of recording is quite different from that in other industries, it should be said because otherwise those figures are misleading. If it is different, why is that not said? As I understand it, voluntary absenteeism is being absent without leave, not because of sickness or for an agreed reason.

Mr. Emrys Hughes: Will the hon. Member come to my constituency and go down a coal mine? He will not need any further explanation.

Mr. Stokes: I have been down a number of mines but—

Mr. Kirkwood: Not to work in a coal mine, but as a visitor?

Mr. Stokes: I do not suppose I should be any use in a mine and if I worked there I think output would go steadily down! The whole solution depends on our getting another 15 million tons of coal. That is the honest truth. It is a fact, but it is not said often enough.
I also suggest that we should alter our method of producing a Budget every year. I think it is quite silly not to have both a Capital and a Revenue Budget. If I tried to run a business in the way the Government try to run the country, I would be "bust" overnight—[HON. MEMBERS: "Hear, hear."]—not for the reasons hon. Members mean, but I refer to the method of accounting. It makes a tremendous amount of difference and must get into the price of goods. If you insist on writing off everything as you spend it, of course taxation weighs you down and it is impossible to produce goods at the right price.

Mr. Boothby: That bears out what I said.

Mr. Stokes: The hon. Member appears to have said something of the kind; if so, it evaded me.
I am going to say something which, no doubt, will be unpopular, but I do not believe it is possible for us to go on expecting to be on a high standard of living in this country after two great wars and at the same time enjoy shorter working hours than most other people. Either, as the Chancellor and others have said, we have to get greater output by greater efficiency, better use of our brains and better administration—and all that comes into it, but we cannot wait much longer—or if we cannot get that quickly we shall have to go back to a longer working week. It is wrong to think of a working week as being one of so many hours. I do not think everyone who works should work the same number of hours. It follows that a heavy worker, who has obviously more physical effort to put in than a light worker, should work fewer hours than a light worker. It should not be that everyone should work the same number of hours. That is a crazy way of approaching a big human problem.

Mr. Kirkwood: How many hours would the hon. Member suggest?

Mr. Stokes: I turn to my immediate policy, and the first item I have on the agenda is trade with Canada. I said the other day that it is about time Canada was brought into the sterling area, and now that the Canadian Finance Minister is over here I wish to say it again. One of the senior Members of the Government challenged me outside the House and asked how I proposed to do it and if I proposed to send a couple of tugs over to pull her into Europe. It does not depend on geography at all; not the slightest bit. It seems odd that Canada should be in the British Commonwealth of Nations and yet refuse to accept the family tickets. I can see the convenience to Canada, but if we look at the trade figures we shall realise that we cannot go on very much longer like that.
Last year we bought £146 million more goods from Canada than she bought from us and that is about 584 million dollars out of balance. On the other hand, Canada bought from the United States 305 million dollars worth of goods more than she sold and we had to provide those dollars. That is absolutely crazy, and if a member of the family will not play ball with other members of the family, sooner

or later there is going to be serious trouble in the family. I wish that pressure could be brought on Canada to close the gap.

Mr. Baxter: I think that is a very unfortunate description of our trade with Canada when we think of her gifts and credits given in order to give time to adjust the matter so that we are not paying more in imports than exports. I would not like that to be said about our trade with Canada.

Mr. Stokes: I am not indulging in that sloppy nonsense. I am dealing with hard facts.

Orders of the Day — ROYAL ASSENT

Message to attend the Lords Commissioners.

The House went; and, having returned—

Mr. SPEAKER reported the Royal Assent to:

1. Lands Tribunal Act, 1949.
2. Merchant Shipping (Safety Convention) Act, 1949.
3. Superannuation Act, 1949.
4. U.S.A. Veterans Pensions (Administration) Act, 1949.
5. House of Commons (Indemnification of certain Members) Act, 1949.
6. Alexander Scott's Hospital Order Confirmation Act, 1949.
7. Royal Bank of Scotland Officer's Widows' Fund Order Confirmation Act, 1949.
8. City of London (Various Powers) Act, 1949.
9. People's Dispensary for Sick Animals Act, 1949.
10. Teignmouth and Sheldon Bridge Act, 1949.
11. Harwich Harbour Act, 1949.
12. Royal Alexandra and Albert School Act, 1949.

And to the following Measures passed under the provisions of the Church of England Assembly (Powers) Act, 1919:

Church Dignitaries (Retirement) Measure, 1949.

Parochial Church Councils (Powers) (Amendment) Measure, 1949.

Pastoral Reorganisation Measure, 1949.

Orders of the Day — ECONOMIC SITUATION

Question again proposed, "That this House do now adjourn."

Mr. Stokes: Now that most of the causes of interruption have been removed, I shall probably be able to conclude my speech with greater celerity. I was speaking about my medium-term policy for curing our present problems, the second point of which deals with the question of unrequited exports and blocked sterling arising from the war, to which several previous speakers have already referred.
I suggest a very simple method. I do not propose we should default on them, but I should like to send a bill to India, Egypt and Irak and others to the full amount of the blocked sterling arising out of the war, requesting them to put a twopenny stamp on it, and charge the Indians for having saved them from the Japanese, the Egyptians for having saved them from Rommel, and the Irakis for having saved them from the Communists. That seems to me to be a simple and not unfair way of dealing with the matter.
The present position is quite crazy. In the olden days when any nation engaged in war it beat up the other man, stole his women, children, goods, cattle and lands, and made him pay for whatever had been lost in the process. After the 1914–18 war we tried to make the Germans pay but found that it did not work. We did not try to do that after the last war. On the contrary, America, ourselves and others have done an enormous job of work and have contributed largely towards putting the Germans on their feet again, while at the same time being milked, through these unrequited exports by the use of sterling balances by the people whom we saved. The Governments of the world should get together and realise that the best thing to do now is to wipe out the lot completely and forget it.
My third point, and this is very important, is to press the Chancellor to set about getting the price of gold revised. I objected strongly to Bretton Woods, and complained about going back to a gold standard. It never occurred to me at the time, otherwise I should have protested much more strongly, that it was a return to a gold standard with gold fixed at an entirely fictitious price. We have today a so-called free market—it is a limited market I agree—where the price

is £22 10s. per fine ounce, but under Bretton Woods the price paid for 40 million ounces of gold in 1948 by the U.S.A. was £8 12s. 3d. In consequence what has happened is this: last year the United States made about £560 million, that is about 2,200 million dollars merely by buying gold at £8 12s. 3d. and hoarding it at £22 10s.
I wish to argue that a change should now take place. When I asked the Chancellor of the Exchequer who fixes the price he said it was fixed by the United States Treasury which astonished me. When I put down a Question the answer I got from the Economic Secretary to-day was completely phoney. It was a reply prepared by one of the "back room boys." What they said was that the United States Treasury fixes the price of gold in the United States. That I can understand, but what I am interested in is who fixes the world price for gold. I agree that if 40 million ounces of gold were allowed to go free on the open market it is possible that the price of gold would not stay at £22 10s.; but I am sure that it would not go down to £8 12s. 3d. The proof is that nearly everything we buy today costs three times what it did before the war—grain, machinery, iron and steel and the rest of it. Yet funnily enough gold, the monetary basis of value of all these things, is only valued at twice as much as it was in 1938.
I want to know why the Chancellor of the Exchequer, as reported at a Press Conference the other day, when it was pointed out to him that Mr. Fetcher suggested to Mr. Snyder that the price of gold should be raised, replied:
I do not share the view and had no part in putting forward such a view. I do not think it [raising the price of gold] would solve our problems.
He did not give any reason why and I should have thought from the figures I have, apart from automatically bringing about a greater expansion in dollar availability, it would have closed the dollar sterling gap to the tune of £321 million. That is over half of the gap which we expect to have this year of £478 million. There is a good reason why this revision should be done. It is laid down in the Articles of Agreement of the Inter Monetary Fund, Article I, Clause (2); that the object of the members of the


Fund, which includes the United States and ourselves and other people, is:
To facilitate the expansion and balanced growth of international trade and to contribute thereby to the promotion and maintenance of high levels of employment. …
Since then there has been the International Trade Organisation the declared object of which is to bring about full employment.
It is clear that whatever else should be taking place in the world today, this restrictionist value on gold and the consequent shortage of dollars is bringing about a high level of unemployment in the United States itself, and by so doing will affect the rest of the world. So we have the right to go to the members of the International Monetary Fund and demand a revision in the price of gold. This would make an enormous difference to the Commonwealth; to South Africa. It would put the Gold Coast on its feet again. Now only 600,000 ounces of gold is produced there because most of the low bearing ore is unworkable at the present price and most of the mines are closed down. It would make gold operate in the way it was intended to operate instead of the way it should not operate. It is crazy to have goods costing three times as much as in 1938 and the base metal being valued at only twice as much.
I wish to put this to the House. Is it not a completely idiotic situation to have a yard stick which does not in any way keep pace in value with the capabilities of the world to produce goods and services? I have often referred to the bus ticket analogy and the hon. Member for East Aberdeen agrees with me. Here we have a more idiotic situation. It was silly, before we decided how many buses we were to have and where they were to run, to sit down at Bretton Woods and argue about how many tickets we should print. But here we have a worse situation; we have three or four times the amount of buses and only issue about half the number of tickets because gold is undervalued. It is even more insane than what I regard as the ordinary monetary system. Gold must in any case have a restrictive effect—why accentuate this by undervaluing it? So the buses are all empty and trade cannot go on.
I hope that as a result of my arguments the Chancellor of the Exchequer will take a little notice of these matters and will take much less notice of those

"back room boys." I should like to get into the Treasury and have a thoroughly good purge there. The main cause of the trouble is that some of those people are living in the dark ages and they should get some new ideas into their noddles. Then I think we should get international trade on its feet again very speedily.
I agree with what other people have said that this is a world problem, and not merely a battle between the United States and ourselves. I do not know whether it is practicable, but I should like to see a sterling-dollar area. I should like the United States Government and ourselves to declare that wherever the dollar runs there should be four dollars to the £, and wherever the £ runs it would be worth four dollars. They do not run their currency on gold in any case. The amount of their fiduciary issue and credit is not measured against the amount of gold hoarded in the vaults at Fort Knox, which must be something pretty formidable; something like 24,000 million dollars worth of gold is stocked there. [An HON. MEMBER: "It is £6,500 million."] If we revalue the gold that becomes worth 72,000 million dollars which would be available for broadening the currency issue. But I do not believe they take any notice of the amount of gold there and it would be much easier to follow the much simpler solution of stopping the digging for gold altogether. There are 500,000 people busy on this idiotic sport of taking it out of one hole and popping it down another and those 500,000 people could be put on a much more useful service, but if to gold we must all be pegged we must go on digging for it.
There are three alternatives before us. Either we can give away our surpluses. If we produce too much we can give it away, which is not at all a bad thing to do—call it Lend-Lease or Marshall Aid or what have you. Or we could lend money to people who have not got it in order to enable them to buy the surpluses; which is called investing in a foreign country and what usually happens in the end is that they default on it. Or we could change our payment system.
I wish to draw the attention of the House to a report from the Federation of Chambers of Commerce of the British Empire which was held in South Africa in September of last year where what is


known as the 20th century economic system was closely examined. That Congress stated:
… Congress has closely and critically examined the London Chambers proposals, and is satisfied that, basic and comprehensive as they are, they merit a thorough and immediate investigation at the hands of Commonwealth Governments with a view to their early adoption.
Before I tell the House what it is all about I wish to ask the President of the Board of Trade if he will tell us whether this proposal is receiving consideration by the Commonwealth Ministers while they are over here? What it means is this. Instead of doing what we do now which is endeavouring to pay an exporting country with the currency of that exporting country, we should pay the exporting country with the currency of the importing country.
At the present moment if we want to buy from America we must pay in dollars. America makes it impossible to get dollars unless she gives them to us, and she is getting tired of doing that! She will not buy goods from us, but there is no means of getting the dollars unless we sell her our goods, and yet we have to pay dollars for everything we get from America. Under my system she would be paid in sterling. I know that she thinks she would not like it very much at the moment, but there would be a day-to-day check of exchange of goods between countries at a central clearing house, and there would be a statutory limitation on the out-of-balance which, after a period of say five or seven years, should be written-off as un-negotiable.
In the case of anybody out of tune for example to the extent of £2,000 million of rights to exercise a lien on goods in this country, at the expiration of five or seven years the amount would be torn up. It would be a very good system indeed. I am not going to start to develop the details of this system because it would take too long, but I do emphasise it because it has the approval of chambers of commerce in this country and it has been endorsed by the Commonwealth chambers of commerce assembled in South Africa who have asked that it should be examined. I would like to know if that is going to be done.
I should like to refer to one point of the hon. Member for East Aberdeen with

which I agree, that the whole problem is one of exchange of goods and not goods versus money all the time. We are still living in a completely out-dated monetary system. My mind goes back to a celebrated remark of President Roosevelt in 1941 or 1942—I forget which. At one of his conferences in New York he said, "Forget the dollar sign and cut out the financial nonsense." That is what we have got to do if we are going to do what is obviously necessary—to make raw materials available and useful to the benefit of all mankind.

7.42 p.m.

Mr. Maclay: I promised to raise a matter with my hon. Friend the Member for East Aberdeen (Mr. Boothby) before dealing with the speech of the hon. Member for Ipswich (Mr. Stokes) because I think my hon. Friend is entitled to be slightly more thirsty than the hon. Member for Ipswich. He described with great emphasis his enthusiastic faith in building up the sterling area into a relatively self-contained unit. I should like to ask him how a country in the sterling area would get its capital equipment and how the people of that country would live while that process was going on unless the United States of America or some other nation—perhaps Russia—came in and did the job.

Mr. Boothby: I do not intend to make another speech, but I suggested that the solution to the problem lies in extensive United States investments within the sterling area, and that it would not be worth their while to invest anywhere else.

Mr. Maclay: That is the point I wish to get clear. I am no great enthusiast for Imperial Preference; I think it has a definite place, but one of the most fundamental things to bear in mind is that there should be a much better understanding in the United States and in our country of the advantages and disadvantages of such a system. If we followed the remarks of my hon. Friend the Member for East Aberdeen too carefully to their logical conclusion, it would become a more tightly-planned economy than anything contemplated, not by the Chancellor of the Exchequer, according to his statements, but by some of his supporters.
I should like to refer to one point in the speech of the hon. Member for


Ipswich. If the Government have got from that speech a clear-cut coherent policy with which they can proceed straight away to solve the matter, they are pretty clever. I wish to deal chiefly with the hon. Gentleman's remarks about Canada. He wrote off Canada's problem too lightly. I do not know whether he was serious or not, but if he was not serious, he should not have said it. He must remember that geography happens to be a very important influence on the Canadians, who live next door to the United States. Their wireless programmes come from the United States and advertising comes on the wireless. Before the war, Canada geared her economy to buying a very large quantity of her goods from the United States and selling her production in soft currency countries. She has depended upon the multilateral flow of trade to get her position with America right.

Mr. Stokes: I am not lambasting Canada at all. I am a friend of the Canadians. What I said was that under the present conditions it is about time Canada came back home, like the prodigal son.

Mr. Maclay: The only way in which Canada can begin to do that is by some effective multilateral system being made possible. There is no other way unless we ask Canada to change her whole method of living and join the United States outright. There is no possible way by which she could come back to us except by a multilateral system. I do not think I should go on with that subject now, because I have certain other remarks to make, but I shall be prepared to take up the point on another occasion.
Coming down with some difficulty from these more lofty planes, may I say that what has surprised me most in this Debate and the events of the last few weeks is that it appears that this financial crisis, or pending financial crisis, has come as something of a surprise to the Government and not only to this Government but to other Governments.

Mr. Sydney Silverman: Mr. Sydney Silverman (Nelson and Colne) indicated dissent.

Mr. Maclay: If it has not come as a surprise, why is it that quite suddenly we have Commonwealth Finance Ministers arriving, meetings in Brussels between Mr. Harriman and the Chancellor of the

Exchequer, and all sorts of emergency action being taken?

Mr. Silverman: Was it a surprise to the American Government?

Mr. Maclay: I said that I thought it was astonishing that it appears to have come as a surprise not only to our Government but to other Governments. I would say straightaway that the prime responsibility for drawing the attention of the members of the Commonwealth and Empire, as well as the Governments of the sterling area and the United States, to an impending crisis of this kind rests squarely with the British Government because they are at the heart of the whole system which they are trying to build up.

Mr. Silverman: Surely the responsibility must rest with the Administration of the country in which the crisis occurs.

Mr. Maclay: I do not think it is worth following up that point, because the crisis is going to affect all of us, and there has been a failure to get ready to meet it. I was arguing that this country was in a position to know what was coming. I know that the Chancellor of the Exchequer and many other hon. Members have been saying that something of the sort would come sooner or later, but they have not made it as clear to the country as they might have done. If there was any evidence of the extreme danger of this position, it was in the Interim Report of O.E.E.C. It was made clear that, even on the optimistic assumptions of peace, full Marshall Aid, maintenance of full employment and the continuance of a sellers' market, it was very doubtful whether the Marshall Aid countries could be viable by 1953. The disappearance of any one factor was bound to lead to immediate crisis. That is what has happened. The sellers' market has disappeared. It is useless to argue that by some magic means of implementing a policy of full employment, the United States could have prevented a falling-off in buying.
There has been too much of this attempt to put the whole blame for the situation on the United States. Following the war there has been great destruction all over the world. The United States has sent out goods in many directions to replace that destruction. The American consumer was not buying goods during the war at anything like the rate which people over here believed. I was in America at the


time, and I know. Immediately after the war they began to buy, and now they have slowed down; they have got all they need.

Mr. Silverman: The hon. Member will surely admit that the American Administration, immediately after the war, took off all their price controls; that the result of that was that prices rose in America and went on rising uncontrolledly for over three years; and that the result of that was that the prices rose beyond the ability of the American people to buy, and so the crisis came?

Mr. Maclay: That has been argued before in this House. I do not propose to argue it again now.
We are delighted, of course, that the Commonwealth Ministers are here, that really serious discussions are going on with Mr. Snyder, and that other activities are planned. But is it conceivable that, with this crisis obviously bound to come sooner or later, there has not been some process going on which is better than merely keeping other people informed of what the British Government propose to do? Surely, if we have any hope of coming through this period and building up a new world, or whatever we are trying to do, on the multilateral basis which the Government Front Bench keep on saying that they are trying to do, there must be some permanent and proper economic consultative committee, or some economic machinery. It should not be just on the top level but on a departmental level which will ensure that the Governments of all the nations concerned will be constantly informed of all the problems of all the nations and none will not be caught short, thus having to try to take emergency measures at short notice.
There is a great deal of evidence that no preparation has been made for that kind of system and that, whatever meetings may have been going on in Geneva, New York, Lake Success or wherever they may be held, the key nations in this situation do not yet know what each other's difficulties are and are not working out the solution together. If any evidence of that is needed, it can be found in the speech of the Chancellor on 6th July when, nearly at the end, he said:
If in the future we are to have the convertibility of currencies and the multilateral form of trade which we have sought ever since the end of the war, and are now seeking, we

and others must begin to build the permanent policies that will make these desirable objectives possible of attainment."—[OFFICIAL REPORT, 6th July, 1949; Vol. 466, c. 2165.]
The words that frighten me there are: "begin to build." In 1949, that is quite terrifying. I cannot believe that the Chancellor ever believed that we could get through this period without a situation roughly comparable to the situation we are in now. It might have come six months ago or two years hence. It is terrifying that we are only now beginning to build a future.
There are still further failures to which I must draw the attention of the House. When the various Governments signed the Convention for European Economic Co-operation, they undertook, among other things, to:
develop, in mutual co-operation, the maximum possible interchange of goods and services, and to this end to continue efforts to achieve as soon as possible a multilateral system of payments among themselves, and to co-operate in abolishing as soon as possible those restrictions what at present hamper such trade and payments.
Those who try to follow fairly closely what is happening in Europe know that our own Government have been making considerable efforts to achieve that objective, and that a lot of other European Governments have genuinely been trying to fulfil that obligation. But I assure the Chancellor that that is not the impression in America. It was not the impression in the United States four weeks ago. I was in Canada at the time where I met a large number of American business men and Canadian people. There was no shadow of doubt, from their conversation and from the Press, that the United States thought that Europe was falling down hopelessly on that obligation solemnly entered into when we signed the Convention.

Mr. Norman Smith: Tory denigration!

Mr. Maclay: Not a bit of it. The Press was full of this. I will deal with the intervention in the normal flow of my speech. We can hardly blame the general American public for that lack of understanding. They know that the Government have talked a good deal of multilateralism, that they have signed the Geneva Agreement and initialled the Havana Charter. They have made all these gestures, and at the same time people in the United States read in the


Press with the utmost regularity of the conclusion of new bilateral treaties.
That is what the American public see. One might foe rather inclined to write it off and to think that it is merely a lack of proper information on the part of the American public. The hon. Member for South Nottingham (Mr. Norman Smith) should realise that some Americans have had an exaggerated idea of what Europe should be able to do in the way of developing a free trading area very quickly under Marshall Aid. I agree that there has been exaggeration on this point in some parts of the United States. The United States cover a great area without internal tariff barriers and there is a high standard of living. People have too easily believed that, with Marshall Aid, in two, three or four years Europe ought to be able to achieve exactly the same result.
But what does one think when one finds the Chancellor going over to Brussels where apparently Mr. Averil Harri-man presented him with practically the same story? Does it mean, as stated in the newspapers, that not even Mr. Harriman had had the difficulties fully explained to him, that he bad not been told of the reasons for some of our actions? According to the Press, the situation was that there was an attack developing on the United Kingdom for its failure to take certain steps.

Sir S. Cripps: I really hope the hon. Gentleman will not take newspapers as being accurate as regards Mr. Harriman's attitude to the United Kingdom. There has never been any question of his attacking me or the United Kingdom. He made certain suggestions over which we compromised as regards a solution. Because somebody makes another suggestion to ours it does not mean that he is attacking us.

Mr. Maclay: I fully accept that, but I cannot accept it as a rebuke. It leads up to the point I wish to make. If that is not a correct version of what took place, there is something lamentably wrong in the presentation of our case and of what happens at these meetings. Something much better must be done. I assume that my remarks could be turned into an attack on the Press, but I am not attacking the Press. I wonder

what the communiques were in the early stages of these discussions.

Sir S. Cripps: I will tell the hon. Gentleman. There was an agreement amongst all of us that no communiques should be given until the completion of the proceedings.

Mr. Maclay: Is not that the answer? Surely, people learned during the war years that that kind of agreement was just the way in which to get matters wrongly interpreted everywhere else. I am astonished at that answer. It means that we are only beginning—we are hardly beginning—to understand the problems which must be faced if we are to get the international confidence which is absolutely essential in order to solve the problems which confront us. This is a very serious matter.
The Argentine Trade Agreement is another case in point. Here we had an Agreement which when it was finally published proved to be not really discriminatory to any serious extent at all. But in the three weeks before the final Agreement was published, the Press released a different story. On the other side of the Atlantic they appeared to be official releases. I have not got one here, and I cannot prove that they were official. They indicated that the United States Administration was not fully informed, did not really understand what was happening in the negotiations with the Argentine, and that they looked on it as a grave departure from the solemn undertakings made by the British Government when signing certain documents.

Mr. Crossman: Is the hon. Gentleman blaming the British Government for the fact that a hostile Press has consistently misrepresented things against the British Government? Is that the fault of the British Government or the hostile Press?

Mr. Maclay: If the hon. Member had listened closely to my speech he would know that I said that there was a lot of evidence that the Administration itself did not know what was really happening and that they thought that Agreement would be infinitely more discriminatory than it proved to be.

Mr. Crossman: Would not the hon. Gentleman admit that the State Depart-


ment, after the Agreement was signed, denied the whole thing and proved that it was merely the invention of a hostile Press, which had been put out in the previous three weeks? Does he not take the word of the State Department against the Press allegations?

Mr. Maclay: I have not seen that statement.

Mr. Crossman: It is about time that the hon. Gentleman did see it.

Mr. Maclay: I wonder—because the statements I saw were pretty damning. Anyway, if this is true, there must be some means of getting the proper version to the public, and we must face the fact that this is one of the problems we have to solve. I leave it at that, but it is a problem, and it is no use trying to pretend that it does not exist.
I had intended to go on in some detail to deal with what I believe to be the real problem—and this is not an attempt at a purely political manœuvre, because one must say what one believes. It is, however, extremely difficult to believe that the heart of this Government is in the urge to revive the multilateral system, and I say that with all sincerity, because I believe that the operation of the multilateral system runs contrary to the practices and theories of the Socialist Government. There are only two of these which I would mention.
The first surely is that multilateral trade, to be effective, depends upon the maximum flexibility of trade by all those involved. Can that be achieved in any system of State trading whether by nationalised industries in the export markets or by any extended system of bulk purchases? I really cannot reconcile these two things, and I do not see how it is possible. We cannot expect to build a system of multilateralism out of the bilateral system, and I consider that objective to be quite inconsistent with the policies which the Party opposite has been preaching for years. If they are changing their minds on those policies, I hope they will say so, but it is wrong and very misleading to argue that one is pursuing a certain objective which is known to be inconsistent with the basic theories in which one believes.
Secondly, does anybody opposite believe that these things can be solved without a big degree of foreign investment by the creditor nations, and, if so, do they not agree that there must be some conditions in existence which would encourage foreign investment to the full? Can these conditions arise under a Socialist Government? We should remember that what is happening in this country is watched very closely in other parts of the world. If this Government continues to nationalise, that will have its effect elsewhere. It means that, over a widening area, there must be increasing reluctance for the nationals of any country to invest abroad, and to use that method of finding some solution to the problem of the dollar gap. It is not just the private investor with whom we have to be concerned today. I cannot foresee the time when another Socialist Government overseas which is a creditor nation—if such a thing might emerge—is going to embark in foreign investments, if it believes that the other nation may nationalise the properties concerned and take them over itself. The whole thing does not make sense.
The only solution of our present troubles lies in building up, stage by stage, the multilateral system again. I do not think that regionalism or Imperial Preference areas are necessarily inconsistent, but this system must be made to work properly and can be built ultimately into multilateralism proper. I suggest that that is the alternative which hon. Members opposite ought to face today, but it cannot be a fixed one. They cannot promise our people a Socialist planned economy at home and try to build up a tightly planned trading area abroad, because, having done that, I can only promise them a steadily decreasing standard of living, possibly with equality, but equality on a lower level than we have known for many years.

8.5 p.m.

Mr. Cobb: Most of the hon. and right hon. Gentlemen who have spoken from the Opposition benches in this Debate have agreed on one point, upon which I should like to follow them. The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) said he would like to see an increase in competition. I am glad to see this conversion on the right hon. Gentleman's part, because he and I happen to be in the


same industry, and every time I have made the competition a bit hot for him, he has either personally or through one of his managers suggested a price agreement. I am therefore looking forward with a great deal of interest to the day when he really faces up to this question of competition. [An HON. MEMBER: "Tell us some more."] It is not quite fair to give away more secrets of his industry when the right hon. Gentleman is not here to answer.
I would like to mention the speech of the right hon. and learned Member for Montgomery (Mr. Davies), who said the same thing. He would like to see more competition and less restrictive practices. If any of the rump of the Liberal Party were left in their places, they perhaps might have answered him on this point. I believe that this country today would have been in a far better position to deal with its difficulties if the Liberal Party, when it was in power in 1906, had followed its policy to the logical conclusion by going in for "trust-busting" in the manner of Theodore Roosevelt. That is what they were supposed to do, and, if they had passed that into legislation in this country, we should have had real competition from 1907 onwards and British industry would have been in a far better position to deal with the last war and the position in which we are placed today.
Again, the two right hon. Gentlemen I have mentioned referred to the prospects and difficulties of productivity, and here again I should like to follow them. The Chancellor stated on 6th July that it was fundamental that industry itself must quickly achieve a decrease in costs and prices by improved productivity. It is, of course, a question whether the Americans will buy our goods at any price. In the position in which we find ourselves, how are we to go about this question of increased productivity, and what are the consequences? Here I want to talk about the self-government of industry in connection with joint consultation. The Government have quite rightly said that we ought to have a rapid spread of joint consultation. The trade unions have backed them up, but there is still something stopping this growth of joint consultation, and I believe that it behoves us on this side of the House and

those in industry generally, to face the practical difficulties in the spread of joint consultation.
Over two years ago, I went to manage a factory which employed about 1,000 people. Today, 381 people are turning out more goods than the 1,000 people turned out two years ago, and, to a very great extent, this was due to joint consultation in that factory. I will admit that it was also due in measure to the fact that rank bad management had existed at that factory before, but nevertheless, point consultation in my experience can lead to largely increased productivity in the truest sense of the word. I observed, in the course of getting this tremendous increase in productivity, that in the first three or four months I was in desperate arguments with shop stewards and workpeople about discontent, and this is where joint consultation started. When we started joint consultation, the discontent disappeared very rapidly, and the district trade union secretaries ceased coming to the factory because there was no need for them to come—there were no problems to be dealt with. Then the workpeople turned round and said, "Why do we need these people? Why pay them; there is nothing for them to do?"
We on this side of the House have to face this problem squarely because it is one of the reasons why the trade unions are not pushing joint consultation. Some of them are loyally pushing it, but others are wary about it. That is quite understandable; it is human nature. This is the kind of thing that is going on up and down the country where joint consultation is being tried, and some people in the trade unions are suspicious of it. I believe that we ought to do our best to overcome that suspicion because I know the dividend that can be obtained when we really push joint consultation to the utmost limits. It will not do any good unless management is prepared to give all the facts to the workpeople; all the facts must be put on the table, because, if they are not, this latent suspicion, which has been there for generations, will not be resolved and we shall not get an increase in productivity.
Having said that, I want to deal with joint consultation from the management side. I honestly believe that the best way of installing joint consultation in a factory is when it is done by a willing


and capable management. Unfortunately, while there are many capable managements in the country—though not as many as I should like to see—they are not willing to give this thing a real trial. How are we going to get it? I believe that joint consultation at the top level is almost useless. It has got to grow from the floor of the shop upwards, and that is what we have not yet got.
I believe that the best agents for selling this to managements are the trade unionists on the floor of each shop, and I should like to see them have in their hands the real information that is necessary for obtaining it. I should like to see my trade union friends build up a small corps of specialists in joint consultation so that when a factory management has been convinced that joint consultation ought to be installed, the trade unionists can call on one of these specialists to come along and stay on the plant for a few days, in order to devise a tailor-made joint consultative arrangement for that particular shop.
As it is, we get this kind of situation. A management is convinced that they ought to try joint consultation, and then they do not know how to go about it and the people in the factory cannot tell them. That is perfectly true, and is going on at the present time. Somehow or other, we have got to see that these difficulties are overcome because of the tremendous dividends in productivity that will flow from a really rapid spread of joint consultation.

Mr. Gallacher: I have listened with very great interest to what the hon. Gentleman has been saying about production committees, because I think they should be made statutory. He says that the managements and the shop stewards ought to get together, but we have been continually told here that shop stewards are, somehow or other, in a conspiracy with the Communists, and that their business is to disrupt production. Is that the hon. Gentleman's experience of shop stewards?

Mr. Cobb: My experience is that if the management is the right kind of management, one does not get any trouble of that description. In answer to the hon. Gentleman's point about making joint consultation statutory, my answer

is that I do not believe it can be made compulsory. It depends upon the attitude of mind. One cannot make people Christians, Socialists, or even Conservatives by legislation; they are either one of these things by conviction or not at all. They cannot be made to indulge in the kind of joint consultation in which I believe by legislation; of that I am quite convinced.
I now come to one other thing which is bedevilling our efforts to increase productivity and which is at the back of the minds of many workers and managements. It is the question, of what is the logical result of an increase in productivity in this country? We can get a better understanding between workpeople and managements, but unless we can sell the increased output, the logical result is that somebody becomes redundant. That is in the mind of everybody on the floor of every factory in the country, and we ought to recognise that fact. We must not shove the body under the table; we must face up to this problem.
Broadly speaking, industries can be divided into three categories; industries which are expanding, industries which we can expect to be stable, and industries which are declining. In addition to the new methods we have to adopt, we eventually come up against the necessity of increasing the horsepower per worker. The moment we start doing this, we make the position worse. We must face the fact that improved methods, increased mechanisation and improved productivity are going to cause redundancy. We must be able to move people, to re-train them for new jobs, and we must have the houses to which they can go. We cannot expect a man to go from London to Newcastle if he has to leave his family behind, live in lodgings, and come home perhaps only once a month.
There is also another difficulty. If a man of 40 has spent seven years of his life serving his time in a particular job, and that job is no longer there for him, and he has to be re-trained, how many years has he to spend re-training, who is going to do it, and then, when he has spent one, two, or three years retraining—and I must say this quite frankly to my trade union colleagues—are his fellow trade unionists going to accept him into the new trade union? Those are practical questions, and until


they are answered, we shall not get the increase in productivity which we so urgently need.
This is not a problem which managements, workers, or Government alone can tackle; it is a national responsibilty to have a policy to which we all agree, and then to put that policy into operation with great vigour, aided by properly set up joint consultation so that the workpeople know all the facts. Once they know all the facts, they will co-operate. There are still many people in this country who are very suspicious of the whole business, and until we can carry them with us I do not believe we shall be successful.
In 1920, Bertrand Russell wrote his book entitled, "The Theory and Practice of Bolshevism," and he ended by saying that he thought we could only get Socialism in this country by a greater degree of self-government in industry. He said we would never get self-government in industry until we had given our people a greater degree of education in the problems of industry. Joint consultation is a great educative force; it educates not only the managements. During the last two or three years, I have learned a lot from joint consultation of this kind; it educates everybody who takes part in it.
In the few minutes that I have left at my disposal, I wish to ask the President of the Board of Trade a few other practical questions. They are concerned with dollar savers. Is my right hon. Friend satisfied that there is adequate co-ordination between the economic and political branches of our official representatives overseas? Secondly, what is the Commonwealth policy towards exports to the sterling area? How far do those exports take second place? I find that people to whom I speak in industry are not clear on this point.
Then there is the question of dollar export targets. How are we to make sure that these targets have their correct impact on the individual firms? It is not sufficient to say that the big firms know about it, or that the trade associations know about it. Some of the most vehicle small companies of which I know, are companies which will not be in the federation or the trade association, and very often the man that runs them is his

own works-manager and sales-manager. He has no time to come here to see the Ministry because he works on his own. How are we to make sure that these people are brought into this great national effort? How can we bring in the small, virile firms and make sure that they play their part in this drive? I must say that paragraph 4 of the statement of the organising committee on this matter is not very reassuring on this point.
Perhaps I may say a word about our commercial attachés overseas. If the commercial attaché knows his job, why does he need a trade adviser? If the new trade consuls in America know their jobs, why do they need commercial advisers? I cannot understand it. It may be that I am a little biased because, before the war, I had some unfortunate experiences with commercial attachés; I found that they were people who had not had a great deal of industrial or commercial experience. I hope my right hon. and learned Friend can tell me that that has now been changed, but I should like some reassurance that these gentlemen who are being appointed overseas to obtain sales have had some business or sales experience. I should like to know whether their terms of reference and their status are quite clear in their own organisation—the Government organisation; and are they quite clear to the customer?
I want to ask my right hon. and learned Friend two more questions. The first concerns dollars for salesmen. From what people tell me I am convinced that there are people going overseas with scarce dollars who have never sold anything in their lives, and they never come back with an order. What steps are we taking to check up so as to see that when a man gets dollars in order that he may spend three months in America and Canada, he goes on a serious business trip and is not, in fact, going on a holiday?; I do not suggest that my comment is true about a large number of people, but it is true about a sufficient number to make the matter, in my view, worth looking at.
Last, may I turn to the question of unrequited exports? We are still making unrequited exports from this country. We do not seem to be receiving anything in return for them. Does my right hon. and learned Friend think that these goods might be more usefully employed on the home market as an incentive? I should


be obliged if he would tell us something on that point.

Mr. Walter Fletcher: Would the hon. Member explain a little more clearly what he means? The essence of an unrequited export is that you get nothing against it, but those going from this country are the results of agreements made by the Chancellor with other countries. Either the agreements have to be cancelled, or the unrequited exports will go on.

Mr. Cobb: But things do not happen as we expected them to happen over a year ago and I suggest it would perhaps be advisable to look at this point again under present circumstances. I hope that my right hon. and learned Friend will look at some of the points I have raised, particularly that about the consequences of increased productivity and mechanisation, because if we do not meet the fear of the workpeople of the country on this point, I am sure we shall not get the productivity which the country needs.

8.34 p.m.

Mr. Martin Lindsay: I am sure the hon. Member for Elland (Mr. Cobb) will forgive me if I do not follow him in the important subjects he has been discussing, and I shall not take it amiss if he likes to leave the Chamber at once in order to get some supper. It is not often that I have the chance of addressing the Chancellor and I shall, therefore, return to his more important speech.
I want to tell the Chancellor, quite frankly, that I thought his speech was listened to with a great sense of disappointment in all parts of the House and not least on the benches opposite. [HON. MEMBERS: "Speak for yourself."] Certainly, I have never before heard so faint a cheer go up after the leading speaker on a great Parliamentary occasion had spoken from that Box. In my opinion it is not surprising that his speech should have been heard with a feeling of disappointment, because I think it was quite inadequate to the very grave crisis with which the nation is faced.
In a fortnight's time we shall be dispersing for the long Recess and I think few of us will leave this House without the feeling that we are likely to be called

together again before the Recess is over, in circumstancs of no little alarm. At any rate we on this side of the House have no confidence that the Chancellor can postpone the coming crisis for very long. We sat down to listen to him today, bracing ourselves for a good deal of bad news and—

Mr. Shurmer: And you did not get it.

Mr. Lindsay: I think it is a great pity that we did not get it. I think that the tragedy is that we did not get the true facts. I hope the hon. Member for Sparkbrook (Mr. Shurmer) will not take advantage of the good feeling which I have for him as a result of his conduct in Birmingham during the blitz.
We were disappointed with the Chancellor's speech this afternoon. The last things we expected were purely negative decisions—and I must say that he himself recognised that they were purely negative decisions—about greater austerity, and the usual platitudes unaccompanied by positive Government action, in order to implement what he held out to be necessary, such as increased production and so forth. Of course we must produce more. There is no need for the Chancellor to lecture to us to any great extent about our costs. Every Member in this House, every thoughtful person in the nation knows about that. But I should have thought it was quite obvious to the Government by this time that it is useless to talk about the necessity of costs being lowered while the Government themselves are taking every step not only to maintain prices but to increase them. I do not want to repeat what has been said so many times in this House; I know it becomes very boring and makes a very dull speech indeed. But if hon. Members opposite will not recognise the economic facts, we must repeat to them that the greatest single factor in keeping up the cost of our exports is the present level of taxation.
In answer to a taunt from this side of the House, the Chancellor said that txation has nothing to do with costs. Frankly, that is a quibble. Every hon. Member who knows anything about business knows that a company seeks to make profits in order to run the cost of its organisation, in order to cover its dividends, and in order to be able to put


money on one side for depreciation. Quite obviously, the larger the proportion of those profits that is taken by the Government the larger still must the company increase its profits in order to cover the big slice of taxation which is taken by the Government.

Mr. John Lewis: rose—

Mr. Lindsay: I am sorry I cannot give way because I promised Mr. Deputy-Speaker that I would speak for only ten minutes. Just imagine how, if the present 60 per cent. of profits which is taken by the Chancellor were reduced to 50 per cent., or better still to 40 per cent., what a saving that would make for companies with which they could directly reduce their costs today or indirectly do so tomorrow as the result of increased modernisation of their plant. Thus we see that the very first prescription for lower costs—that is lower taxation—lies in the Government's hands.

Mr. Deputy-Speaker (Mr. Bowles): The hon. Member must not discuss changes in taxation because that involves legislation.

Mr. Lindsay: With great respect, Sir, and without wishing to challenge your Ruling in any way, it makes it very difficult in an Economic Debate if one cannot deal with the question of taxation, but I shall endeavour to keep my remarks in Order.

Mr. Deputy-Speaker: The hon. Member may refer to taxation, but he cannot suggest any changes because that would involve legislation.

Mr. Lindsay: I am much obliged. I can then only say, in general terms, that it is necessary to lower taxation without showing in which way taxation could be lowered. We were taunted by the hon. Lady the Member for Cannock (Miss Lee) that we have not got any suggestions as to how taxation could be lowered by greater economies, but I shall endeavour to confine my remarks within the rules of Order.
The second way in which the Government must assist industrialists to keep down their costs is by calling a halt to the policy of nationalisation and also of bulk purchasing, because how can our industrialists reduce their costs when their fixed charges such as the prices of fuel, power and transport, as well as of their

raw materials, are kept artificially high by Government action? If the Chancellor has his way, as he reminded us this afternoon, we shall have the nationalisation of the steel industry, which will unquestionably—surely no hon. Member can challenge this for a moment—increase the price of steel, not only by bureaucracy, but particularly because of the increased expectations which nationalisation will arouse in the minds of the steelworkers, and which will have to be assuaged by higher wages. The same will no doubt apply to the cement industry.
I come to the next factor which increases our costs—the short working week. I entirely agree with the hon. Member for Ipswich (Mr. Stokes), and I say that no sensible person can expect our costs to compete with manufacturers in overseas countries, where they work 50 hours a week, when we in this country work a 40 or 44-hour week. And within these working hours we are not getting the work done which we used to get before the war.

Mr. C. Poole: It is not true.

Mr. Lindsay: It is. I am sure that many hon. Members were struck with the authoritative assessment, which came out only a fortnight ago that the tea interval in the case of the building trade, results in an increase of £50 in each house, or 9½d. a week in rent. Having said that it is vital that taxation should be reduced, I shall leave the question of the economies that should be made, because otherwise I shall get myself outside the rules of Order.

Mr. Deputy-Speaker: The hon. Gentleman misunderstood what I said. He can suggest economies but not alterations in taxation, which requires legislation.

Mr. Lindsay: I am grateful for that correction. I can follow the hon. Member for Ipswich and say how much I agree with him when he talked about reductions in the cost of the Armed Forces, which in Socialist minds is always a popular field for economies. He referred to the question of conscription, and I can only say that I could not agree more than him that nothing could be more wasteful than our present system of training every man for the Armed Services in spite of the fact that a very large number of them in wartime would be wanted not for the


Armed Forces, but in the fields and factories. That implies a modified form of conscription, but it interferes with the prejudices of hon. Members opposite in regard to what they call "fair shares for all," although I prefer the description of my right hon. Friend the Member for Woodford (Mr. Churchill), who calls this form of madness "the universal sharing of misery."
I turn to education, and it is quite apparent to me that there could be, without any loss of efficiency, a considerable saving in this field. School building is far too lavish, I can quote the example of a single high school in Devonshire, where the Ministry insisted that they should build an assembly hall, a dining room and a gymnasium, each at a cost of £10,000, rather than one or perhaps two of these buildings which could be used alternatively for other purposes.
Everywhere one looks one sees extravagance on the part of Government Departments. Only two days before the Chancellor made his grave statement last week we had the announcement of £750,000 to be spent upon a temporary fun-fair in Battersea Park. The day after that, we heard of a huge development scheme for the London underground railways which, like the new towns, one is confident will never be proceeded with in our own lifetime. With the example before us of the Government as the most prodigious and reckless spenders of all time, what can one expect of local authorities? Naturally, one finds that the example of the Government is reflected in council chambers all over England today, resulting in rising costs of administration and vast increases of capital expenditure, leading to increases in assessments.
As we have said on this side of the House, the Government have got their priorities all wrong. The Chancellor told us this afternoon that British production had increased by 10 per cent. He did not tell us by how much American production had increased.

Sir S. Cripps: I said productivity.

Mr. Lindsay: The estimates for America vary and I do not know what the truth is, but 75 per cent. was mentioned in this House today, and other people have mentioned 100 per cent.

Sir S. Cripps: The hon. Gentleman is getting confused between productivity and production. I am sure that the figures he is quoting about America relate to production. The figure of 10 per cent. which I gave was for productivity.

Mr. Lindsay: I apologise to the right hon. and learned Gentleman. The point I was making is that production has increased much more in the United States than in this country because over there the Government have freed their economy and are not nationalising anything. The very opposite is the policy of this Government, who are also anxious to increase production. The wasteful and unnecessary expenditure of which we see examples on all sides in this country, makes much greater difficulty for our manufacturers in the export field, not only because it keeps costs high but because, as my hon. Friend the Member for Chippenham (Mr. Eccles) has reminded us more than once, of its drafts upon the resources of the nation in manpower and raw materials, which are misapplied. If only part of the energy and expenditure which the Government have expended upon the groundnut scheme had been applied to the benefit of our own land, I believe that the result would be very much more beneficial to us.
In his speech today the Chancellor once again said that the greater our import difficulties, the more important is the development of British agriculture. I wish the Government would take that statement to heart. There are, no doubt, tremendous possibilities in this direction, and nothing like the maximum is being done at the present time. One of the most important steps towards defeating the balance of payments problem is to stimulate home agriculture to the maximum extent and thus reduce even further the purchases from the dollar areas which we have been accustomed to making in the last few years. Anybody looking at the bare economic facts with which we are faced might well have cause to despair, and it is only our faith in the people of this country which gives us cause for encouragement—the fact that we have still in these islands the same great people who proved themselves great in 1940.
Today, unfortunately, we are in the extraordinary position of having a Government which is pledged to the welfare State and yet can no longer guarantee


the two most important fundamentals of the welfare State, the people's food and employment. This is not as yet apparent to the man in the street, and I fear that it will become no more apparent to him today as a result of the speech of the Chancellor. I do not believe that the truly desperate nature of the economic crisis is apparent to the Government even as late as today. All that the Chancellor said today implied only that the ship of State is sinking but that it will do so with the red flag of Socialism nailed to the mast. Were it not for the fact that an alternative captain and crew are available, the outlook would be grim indeed.

8.42 p.m.

Mr. David Eccles: Many of us have known for a long time that the day would come when we should have to debate a run on the British gold reserves. Again and again on this side of the House we have warned the country that this kind of crisis was inevitable unless the Government abandoned their insular, unworkable and grossly extravagant policies. The party opposite have done much harm by trying to belittle and smother these warnings, and they have never done more harm than through the chief spokesman from the Front Bench today. They will be held guilty of this concealment of the truth by the electorate, and for the rest of their lives they will be reminded of the four years of Socialist misrule.
It would be very easy for me to spend the time at my disposal going over the discreditable steps by which the Government have led us to this situation, and by quoting extracts from my own speeches I could show how at every stage I have pointed out that the mismanagement and errors of financial policy would sooner or later bring us to a crisis. There will be a time for an examination of that sort, but I believe that the House feels that the purpose of this Debate is to discover whether there is a chance left, however small, to save sterling from a collapse. This is probably the last occasion on which we shall debate the economic situation before we rise for the Recess, and, as the Chancellor himself has told us, during the Recess vital decisions will have to be taken at New York and at other conferences. I make no apology, therefore, for concentrating my remarks upon the immediate future.
I had hoped that the Debate would show that both sides of the House now saw the danger in the same perspective, but all those hopes went overboard when I listened to the speech of the right hon. and learned Gentleman. It was quite clear that he was still intent upon the soft-pedalling of the emergency which is coming up before us. He said, "I am going to cut £100 million. It will not hurt anybody. The housing programme will be continued. We shall get along everywhere the same as before, except in regard to sugar. We are going to cut that by a couple of ounces." Then, I admit largely through seasonal circumstances, he was able to counterbalance that by saying that the British housewife would get a few more ounces of fats,, meat and bacon. There was no urgency there. Yet we are faced by an immediate problem which overrides the long-term difficulty which the Chancellor succeeded in putting in the forefront—[HON. MEMBERS: "Order."] The Chancellor never listens when he is being criticised.

Sir S. Cripps: I can assure the hon. Gentleman that I have heard every word he said.

Mr. Eccles: No doubt the right hon. and learned Gentleman has learned how to talk in order to save time in listening. [An HON. MEMBER: "What does that mean?"] The right hon. and learned Gentleman was talking to his right hon. Friend, which no doubt saves him time in listening.
There is an immediate problem which cries out for solution and I want to put this problem to the House in a way which will make hon. Members believe what I say. It happens that I met a foreigner last week who all his life has been a friend of this country. He described the problem to me in highly significant words. This man is a Scandinavian shipowner whose fleet of vessels earn sterling freights which are paid into his bank in London. He also has two new ships building for him in British shipyards. Until recently he has allowed his freights to accumulate and, from that source, he has made payments on account of the ships under construction. Now, however, the day he receives his freights he takes his pounds away and only brings them back at the last moment before a pro-


gress payment falls due. When I saw him he had just been upbraided by his banker for this loss of confidence in sterling. I weighed in on the side of the bank, and then this man gave me his reasons for refusing to hold a sterling balance even for one night. It is those reasons which I commend to the House because they are, as it were, a slice cut from the living flesh of the crisis.
He said that to hold another currency was to invest in the solvency and stability of that country, and the only test by which one could judge of that stability was to look at the reserves behind the currency. That is what he had done and he had seen unmistakably that the British reserves had been allowed to fall far below the safety level. He said we had no reserve of labour, we were fully employed—[HON. MEMBERS: "Ah!"] I am giving the House a fair description of what he said. He said we had no reserve of labour and had not discovered how to persuade men doing unnecessary jobs to go and do more necessary jobs. He said we had no reserve of savings, that the Government's capital expenditure this year would not be covered by a true Budget surplus, and he saw no hope of a revival in personal savings. He said this must be so because Socialist policies had eaten up all the reserves of taxable capacity, and that British Government expenditure was rising rapidly beyond the revenue which any Chancellor could collect.
Then he went on to describe our gold reserves as quite inadequate from whichever way he looked at them. He said that £400 million was too low when compared with the volume of foreign-owned sterling in London; it was too low when measured against the gap in the balance of payments on the United Kingdom alone; above all, it was quite inadequate for the trade and banking requirements of the sterling area. He asked, did I not think it appalling that London, the central banker of the Commonwealth and Empire, should be brought to her knees by a three months' decline in American purchases of raw materials? I took him up on one point—the point which has already struck hon. Gentlemen opposite—and asked him if he was really suggesting that we ought to have a reserve of unemployed labour. He replied that what

he had meant was that a fully employed society doing the wrong things would find it exceedingly difficult to change the pattern of employment and do the right things, and that when he saw so many people here employed on non-productive work he set that down as a weakness which we could not afford, all the more so because our other reserves have been robbed to finance the Socialist experiment.
Subject to the point about unemployment, to which I shall return later, I ask the House to agree that my Scandinavian acquaintance put his finger on the central truth of the crisis: that we cannot hold together the financial system of the sterling area unless we begin now to rebuild the reserves of gold, savings and taxable capacity. If we shrink from doing so—indeed, this kind of shrinking was the Chancellor's message today—the sterling area will break up and one by one its members will go to the United States for the credit, the capital and the monetary security which they must have if their individual development and progress are to go forward.
The British public take the sterling area system for granted. They pay no more attention to it than they do to the circulation of their own blood. If sterling could no longer flow unhindered from one member of the area to another, if the primary products of the area could no more be financed and paid for through London, what would that stoppage in the monetary circulation of the Commonwealth mean to all of us? Do the public know how much food would disappear from their dinner tables and how many raw materials would be in short supply in their places of work? Why do not the Government explain these things in simple words and with homely examples to all those people—to all the dockers, for instance; and not only to the dockers, but to all whom for the last four years they have flattered and deceived? There is nothing more degrading than a weak Government using troops instead of telling the truth.

Mr. Harold Davies: Will not the hon. Gentleman agree that the United Nations organisation and other sources say that more information on the real economic position of Britain is being disseminated in understandable and simple language


today than ever before in the history of any past Government?

Mr. Eccles: I have said in the House before that the trouble with the information that is disseminated is that it is so selective and that its effect upon the people—[Interruption.] I do not know why hon. Members should be surprised. It seems almost inhuman that any Government should spend millions and millions of the taxpayers' money on an information service not designed to boost their own works.
We have reached a point in the exhaustion of our reserves where the risk is very great and very near that the sterling area will break up. All the members of the sterling area share the responsibility of rescuing the Commonwealth and Empire from financial disintegration; but it is upon the mother country and, by one of the ironies of history, particularly upon this Chancellor, that the responsibility rests overwhelmingly to prevent the liquidation of our most precious inheritance. If we do not make the major contribution to rebuilding tine family's reserves, the other members can play no effective part. London is the centre; the financial machinery is here. The Bank of England, in which it is high time the other Commonwealth nations became shareholders, is the repository of the reserves of the other members. These other members all look to us for credit, for capital and for monetary security. They cannot be expected to bank with a Government which is so overstrained that it gets into difficulties over the normal fluctuations in prices such as we are having today.
It is not surprising, and we ought to face the fact, that there is a growing number of people who do not want to hold a sterling balance. Distrust of this nature, if it continues, for only a year or two, spells ruin for us. It is our duty to see in what way and how quickly we can restore confidence in our money and in our ability to hold the sterling area machinery together. There is only one way in which to rebuild reserves and that is to live within our income and to adopt the right policies to expand that income. I challenge anyone to say that there is any other principle by which it can be done.

Mr. S. Silverman: Was it in fulfilment, or in pursuance, of that principle that

the hon. Member, only a week or two ago, proposed to raise the personal incomes of that section of the population which has the most income already, by reducing the standard rate of Income Tax?

Mr. Eccles: Entirely in fulfilment of that principle. [Laughter.] Hon. Members may laugh, but they will find as time goes on that they will be driven to the realities of this world and will find that there are certain policies which produce more goods and others which produce more restrictions. I am for those which produce more goods. I see the processes of cutting down expenditure and expanding output as inseparable parts of one operation. How can we expand output with vigour unless inflationary pressures are removed; and how is there any way of doing that on an effective scale except by reducing the demands of the Government on savings, labour and materials? It is also true that reductions in Government expenditure would not be put up with unless they were seen to lead to a great upsurge in confidence and in production.
Hon. Gentlemen opposite often tell us that no reductions in Government expenditure are tolerable. I wonder why they say that? I think some of them say it as an act of faith in the Socialist experiment. I think all of them say it because they are afraid of unemployment. So am I, but I am much more afraid of unemployment if we go on as we are. Our present full employment rests upon most precarious foundations of the continuing supply of loans and gifts from our friends overseas and it ill becomes, the hon. Lady the Member for Cannock (Miss Lee) to lecture the Americans about their three or four million unemployed, when her own Ministers on the Front Bench below her have said that we would have two million unemployed were it not for American dollars.

Miss Lee: It ill becomes the hon. Member to mislead American public opinion about the fact of our inter-dependency. I think he should make it quite clear that if unemployment comes to this country, it comes to America, and the best way of getting rid of it in both countries is an increase in Marshall Aid and not a decrease.

Mr. Eccles: I would never make anything of the kind clear to America. Unemployment will come to this country if we go on working Socialist economy.

Mr. J. Lewis: There was no Socialist State before the war.

Mr. Eccles: If these American subventions prove incapable of stopping the drain on our gold reserves—and nothing the Chancellor told us this afternoon makes us think that that will not be so—then indeed we shall have unemployment, and we shall have it under the worst possible conditions, because all our hard currencies and our credit will be used up, and there will be no room to manoeuvre in any direction.
Are the party opposite ready to face up to what it is necessary to do to avoid this kind of blind, brutal, massive unemployment? If they are they must strip the economy for action; they must clear the decks of all the superfluous cargo with which the Socialist Party have cluttered up the ship so that it is impossible to handle her even in the light breezes of a mild recession in world trade. The measures to be taken fall into two categories, those which are purely domestic and those which demand international co-operation. At home we need a clear and dramatic objective which can be held up to our people as the hallmark of action to improve our competitive position. It may be that the experts say that there are 50 different things that we ought to do, but from the point of view of people and politics we need to find something dramatic which we can do.
I do not know whether it is true, but I am told that the Government have been thinking of export subsidies. I hope that that is not so. Export subsidies are a very poor instrument, for they do not relieve the inflationary pressures; indeed they make it easier to sell goods which have cost even more than they cost today. The objective to which I would work is the withdrawal of the White Paper on incomes and profits. That is an attempt by exhortation and thinly-veiled threats to freeze the rewards of industry; it suffocates expansion, it kills growth and takes the heart out of the thrusting and ambitious members of our community. How can the Government talk about lowering costs when there are a half-dozen major industries in this country sitting on wage claims which, when considered on their merits, have considerable justification? Do Ministers really believe that they will get a response to their appeals for production

as long as this White Paper on incomes acts like a wet blanket upon all and sundry?

Major Bruce: Will the hon. Gentleman now tell the House whether he is speaking officially on behalf of his party? It would be rather interesting if he would say.

Mr. Eccles: It is not a question to which I intend to give an answer to anyone like the hon. and gallant Member. The essential step is to get rid of this White Paper on incomes which is throttling young people and every ambitious person in this country. We can never expand while we have this great ceiling on top of us. We must reduce demands on our resources to the point where the inflationary pressure no longer exists. When that has been done, then all those whose efforts deserve an increased reward—and there are many—can put forward claims upon their merits and can have them properly considered, which today they cannot do.
Can hon. Gentlemen opposite tell us of any other way by which this White Paper, which does so much damage, can be withdrawn, except by reducing the taxes that press so hardly upon the cost of living? They may say that it should be done by cutting profits, but can it? Let us look at the proposition mathematically. The fact is that the profit margins—a farthing a pint on beer is a good example—are too small to make any great impression on the cost of living. If that is not so, I would be grateful if some hon. Member would prove me wrong in the Debate on Monday. What I think should be even more convincing to hon. Members opposite is that if profits are wiped out, then of course the yield of the Income Tax diminishes, and the Chancellor finds himself compelled to raise more taxes from the wage earners in order to make good the loss of revenue from company profits. There is no escape from that, and there is no means of reducing the cost of living quickly and rapidly other than by reducing the taxes which fall upon the things that people buy and on the costs of production.
I suppose that hon. Gentlemen opposite will retort that such reduction in the taxes must curtail the activities of the welfare State upon which, they say, the British people have set their hearts. They would be right about the consequences


of large economies in Government spending; but are they so sure that they are right about the wishes of the people? The wage earners now form the main body of the taxpayers. How many of them are beginning to question the cost of Socialism, which they were led to believe would be paid for by somebody else? All of us go about our constituencies and we notice a change of view upon this point. Hon. Gentlemen opposite notice it as much as I do. The Government have not the courage to interpret this changing point of view. We see them denying that there is among our people today an uneasiness at the burden of taxation which is placed upon them. The Government act as if the present level of their expenditure—which was never once mentioned by the Chancellor in his speech today—were a sort of sacred ark for which everything the housewife buys and everything the family enjoys must be sacrificed ruthlessly and without a murmur of protest.
That is not the way to revive the vigour and spirit of the British people. Nor could it be done by a series of prods and bribes to this or that exporter, or by fixing up more of these paper agreements, in which I have no faith whatsoever when world prices are against us. All those things are subterfuges, and they are no remedy for a country whose existence depends upon trade with the whole world and in competition with the whole world. For us in our narrow and crowded islands it must always be true that either we are equal to the best or we shall fall further than imagination can describe. The Government's inaction and rigidity on all these things has been a great breeder of pessimism. I believe that that pessimism is largely unwarranted if we will look to the true facts about productivity.
I was greatly interested that a number of hon. Members made most interesting contributions on this subject of productivity. There are in this country great reserves of productive power. They are not apparent to an outside observer, like my Scandinavian friend, to whom we appear to be fully employed and incapable of any rapid expansion. But if the House will look at the official statistics they will see a very different picture from the rosy one which Ministers are continually displaying around the country. Take the figures for the total number employed in

manufacturing industries in 1938 and compare them with those for 1948. We find that there has been a rise of 12 per cent. in the total number employed. Then compare the index of industrial production over the same period, and we find that the rise is almost exactly the same.
It is possible by choosing one or other of the indices to make out that the output per man over this period of ten years has in fact improved by two or three per cent., but not more than that. In one sense these figures are very disturbing. All the new techniques, all the new machinery, and all the raw materials we have imported free or on loan appear to have been absorbed without giving us any significant increase in output per man. In another sense these figures are very comforting. I should be much more disturbed if the gap in our balance of payments were as big as it is today in spite of a rise of 15 or 20 per cent. in the productivity per man over the last ten years.
These official figures show that we have it in our power to do very much better than we are doing. That is a great and inspiring thought. The Government tell their supporters that the only way in which we can get greater production is by new machinery and improved methods. The hon. Member for Elland (Mr. Cobb) gave us a most interesting view about joint production councils, with which I agreed wholeheartedly; but it is not true that that is the only way in which we can get better production. It would help, but the fact is that greater production could come, and will come, by harder work with the skill and tools we already possess.
The hon. Member for Ipswich (Mr. Stokes) mentioned coal. Surely, the House ought to face up to the coal situation. What has happened to our coal exports? What a tremendous amount of new machinery we have put down the pits, and how we have concentrated incentives upon the coal mines. Yet, we have hardly regained a fraction of our pre-war exports. Those are questions which must be faced. Let us take agriculture. The Government have continually under-rated what British farming can do. Now they are doing the worst of all things. They are shaking the confidence of the industry by all these rumours about the import of horticultural and other fanning products which apparently are to be made


to please soft currency debtors. Today we have low productivity because we are doped by false theories, weakened by inflation and depressed by taxation. But all these are handicaps we have given ourselves. If we have the will, we can sweep them all away.
I want to say something about the measures which involve international co-operation. None of these will be any good at all unless we are taking the appropriate domestic action. I assume that we are and that the Government are moving energetically towards the withdrawal of the White Paper on Personal Incomes, Costs and Prices. What should be our commercial policy? First and foremost, the sterling area must make up its mind whether its continued existence is of sufficient importance to warrant new, intimate and permanent co-operation in the economic and financial fields. There can be only one answer. We are in trouble together, and together we must get out of it. I quite see that this would mean an increase in the influence of the younger members, like Malaya, upon the economic and financial policies of the area as a whole, but why not? The old firm badly needs a spring-clean, and a few new faces on the board would be as welcome to the shareholders as we know they would be to the staff. When the sterling area is reorganised, it can feel its way as a unit—it cannot do it in separate parts—both towards co-operating in Western Union and towards multilateral trade. Only then, when it is reorganised, can it take its time.
I admit that the arbiter of the pace will be the United States. If the Americans want multilateral trade, they must set an example, and, to move at all quickly, I think it would be necessary to have a large stabilisation loan, and that it would be necessary for the Americans to take many positive acts to open up their markets to high-quality goods from the rest of the world. I am not pessimistic about high-quality goods in America. I agree with my right hon. Friend the Member for Aldershot (Mr. Lyttelton) that, with mass production, we cannot get into America, but there is a wide market for specialised goods of the kinds we can make. I cannot see the Americans taking action of that kind unless they are first assured that we are putting our own house in

order, by which I mean that we and the other members of the sterling area are making an all-out effort to rebuild the reserves of the sterling area, and I mean reserves of gold, savings and taxable capacity. It is no good having the one without the other. The Americans have twice given us dollars upon a false prospectus, and we ought to be ashamed to ask from them a third time until we have made an effort to live within our own income.
I say, in conclusion, that the interests of the United States, of the sterling area and of Western Europe are the same—to expand trade and to extend the democratic liberties. We know what we want, and we know how to get it. Why, then, do the Government persist in their policies of restriction? Why do they not give a lead in the policies of expansion? Why do they not give up their domestic theories and their absurd adherence to the present level of Government expenditure, and go in for the revival of trade here, in the sterling area and in the world? These are the great questions to which we expect answers in the course of this Debate, and it will be upon the answers to those questions that the Government will be judged by the country.

9.19 p.m.

The President of the Board of Trade (Mr. Harold Wilson): The hon. Member for Chippenham (Mr. Eccles) will forgive me, I know, if I do not immediately follow him on some of the points he raised, because I should like to deal first with some points raised by other hon. Gentlemen before I turn to what the hon. Gentleman has just said. I will just say this about some of his remarks. If anyone were tempted to take the hon. Gentleman seriously, which I know they are not—[Interruption.] Well, then, if they are, and I hope they are not, the effect of his speech will be to attempt to disrupt the whole sterling area, and let me say that we on this side of the House are not prepared to make the sterling area or Commonwealth economic relationships a pawn in party politics.
The hon. Member showed his obvious disappointment that the serious measures which have been announced this afternoon for the purpose of reducing dollar expenditure are not expected to interfere with the housing programme or to in-


volve serious hardships on the housewife. He went on to refer to two subjects which I should have thought were the last subjects any Tory would dare to raise in this House—coal and agriculture. Before I deal with the points he made on these, let me first refer to certain things which have been said, particularly by the right hon. Member for Aldershot (Mr. Lyttelton) in an attempt to explain the causes of our problem.
Right hon. and hon. Members opposite have been at pains this afternoon to suggest that the deterioration in the gold and foliar deficit is due to high costs at home, to excessive Government expenditure, and to various other internal factors in our economic situation. The hon. Member for Solihull (Mr. M. Lindsay) advocated a policy like having a groundnuts scheme in Solihull, and he went on to imply that this overseas external payments problem could be dealt with by making school buildings in Devonshire less lavish, which was totally irrelevant to the problem with which we are faced.

Mr. W. Fletcher: Like the right hon. Gentleman's remark about groundnuts.

Mr. Wilson: A number of hon. Members opposite tried to put the whole blame for the present situation on the level of internal costs in this country. Of course, neither my right hon. and learned Friend nor I, nor, indeed, any of us in any part of the House, would deny the need to keep our production costs down to an absolute minimum, and I am not sure that what the hon. Member for Chippenham suggested about the White Paper is going to be the best way of doing that. The figures published, which the House has before it today, showing the causes of this grave increase in the dollar deficit, show that it is not so much exports from the United Kingdom as other and more external factors that have been responsible.
Earnings from exports to the dollar area from the United Kingdom in the first six months of this year are estimated to be turning out at about £88 million against a previous forecast of £100 million—£12 million, or 12 per cent. lower than we had hoped. But surely it is plain to the House that the two major factors have been an increase in the other payments and receipts from the United

Kingdom, that is, broadly speaking, a deterioration on invisible account as well as, perhaps, some quicker cashing of American account and other sterling into dollars, and, secondly, a decline in the revenue from the sale of sterling area products in North America. Undoubtedly, that has been the biggest single factor.

Mr. W. Fletcher: Will the right hon. Gentleman explain to the House, as he thinks that is so important, what steps the Government have taken, in spite of the many warnings they have had, to stop the enormous dollar leakage there has been on exactly those raw materials?

Mr. Wilson: My right hon. and learned Friend has dealt with that on a number of occasions.

Mr. Fletcher: Will the right hon. Gentleman do it now? Give us the answer.

Mr. Wilson: The hon. Gentleman should know, if anyone should, the difficulty of dealing with that situation.

Mr. Fletcher: And the slackness there has been in dealing with it.

Mr. Wilson: Compared with the estimated shortfall in earnings from the United Kingdom exports of £12 million, the increase in the deficit of the rest of the sterling area is £22 million—easily the major factor in the situation. As my right hon. and learned Friend explained today, part of the decline in our own exports and re-exports really represents a decline in sterling area shipments routed via this country. How grave has been the decline in the prices of certain sterling area raw materials can be seen from the fact that rubber, which was 13¾d. in the third quarter of 1948, has fallen to 10¼d. in June of this year—a fall of 25 per cent.

Mr. Fletcher: Because the Government have done nothing about it.

Mr. Wilson: The hon. Member always pressed for rubber to be returned to a free market and it has been. Cocoa, which was 44 cents per lb. a year ago, had fallen by June of this year to 19½ cents—a fall of 55 per cent.; and merino wool, which as recently as January stood at 103d. per lb., has fallen to 89d., a fall of 14 per cent.
So the main factor in the situation is not the decline in United Kingdom exports. Indeed, a considerable part of the decline in our combined export and re-export figures is a reflection of what is happening in buyers' market conditions not only to our own exports, not only to sterling area exports, but to the exports of practically every other country in the world. It is certainly true that we were told about being a high-cost country, but it is also certainly a fact that the exports to the dollar areas of Switzerland, Belgium and Italy, which have been held up by the party opposite as efficient low cost countries, have similarly fallen.
My right hon. and learned Friend this afternoon stressed the need for the maximum effort in dollar exports and hon. Members of all parties have re-emphasised what he said. I must say, for my own part, that I reject the idea of the right hon. Member for Aldershot that exports of manufactures to the United States could be regarded as coals to Newcastle. Rather would I take as authority on the subject Mr. Hoffman, who recently said:
Here in America is the richest market in the world with an annual income of 200,000 million dollars. Let us assume that Europe does have to find a way within the next few years to increase its exports by three billion dollars annually over the level now contemplated. All that Europe needs to do is to find ways of attracting an additional one per cent. of the American national income for the purchase of her wares and the problem is solved.
These are the words of Mr. Hoffman. It will be clear, and it is clear, from the difficulties which our exporters today are meeting in North America that we shall need the very greatest efforts even to maintain and regain the rate of exports we were achieving a month or two ago.

Colonel Dower: What markets are we to capture?

Mr. Wilson: I will come to that in a moment and deal with it at some length. The judgment I formed following my visit to Canada in May was that while there were enormous possibilities for the development of our exports of engineering equipment to Canada, the most energetic efforts would have to be made even to maintain our rate of exports of certain lines of consumer goods.
I have today received the provisional figures for June of exports to the dollar

areas and I believe, even though they are still provisional, the House will probably want me to give them. Before I do so I should remind the House that June, like April, was a short working month, affected by holidays so, as my right hon. and learned Friend said this afternoon, the total exports in the month were down, though the daily rate was higher than in any other post-war month except January of this year. But even when allowance is made for the shorter working month, I have to reveal to the House a still further reduction in exports to the dollar areas.
Exports to the United States, which averaged £5½ million a month in 1948, £5.3 million in the first quarter of this year and had fallen to £3.6 million in May, fell to rather less than £3 million in June—£2,983,000. Exports to Canada also fell from the May figure of £7.6 million to rather more than £6 million in June, which is very slightly below the 1948 average, but an analysis of the figure shows that it is largely exaggerated by erratic movement in the figures of exports of ships, a sudden change in which can make a very big difference from one month to another.
In my speech in the Debate on the Budget in April, I referred to the measures, which could be taken both by Government and industry to encourage dollar exports. Since that time, as the House knows, there has been the meeting of representatives of industry with my right hon. and learned Friend and myself, and following the report of the Baillieu Committee, the Dollar Exports Board under Sir Graham Cunningham, drawing for its members on the experience available in the ranks of industry, commerce, finance and organised labour, has been established. I am sure the whole House will welcome this spontaneous decision taken by the representatives of all the organisations concerned, and wish the Board well in the very difficult task it has ahead of it.
Meanwhile, as the Dollar Exports Board and this House know, the Government stand ready to give the fullest assistance which a Government can give to all those who are willing, whether in the national interest, in their private interests or, as we may hope, in the interests of both, to launch their ships to the dollar area. On 11th April I indicated an eight-point programme for Gov-


ernment assistance to dollar earners. I will not take the time of the House this evening by repeating what those eight points were, but I will re-emphasise that within the general system of controls operated by the Government we shall not hesitate to discriminate openly in favour of firms which can increase their exports to the dollar areas.
As it is our policy so to discriminate, it must, I submit, be the policy of private industry itself to discriminate in respect of dollar orders. This means that more and more firms, if they find it necessary in order to remain competitive, must be prepared to take lower prices and lower profits by accepting dollar orders. Quite a number of private firms are already doing it. It is being done by public enterprise as well, and certainly it would be contrary to the highest national interests if firms were to refuse dollar orders which they could get in the interests of getting higher profits in other parts of the world.
Secondly, industry will, I am sure, be prepared to discriminate in terms of delivery dates. We have heard a lot this evening about the alleged high cost of our exports. In Canada I found as the members of the Engineering Mission found that, apart from one or two exceptions, there was no evidence that the price of our engineering exports was higher than those of our rivals, but on delivery dates we had to make bigger efforts in order to compete. This can only be done by open discrimination in favour of dollar orders.
I have said that the Government will do all they can to encourage the export drive, and I want to repeat tonight that the Export Credit Guarantees Department, whose powers were strengthened by this House not long ago for this purpose and others, stands ready to entertain any proposal from any exporter, however unusual, for financial assistance and participation in connection with the special risks associated with the attempts to sell in the North American market.

Mr. Lyttelton: I hope that the right hon. Gentleman will deal with the point about raw materials coming into this country which form part of our exports.

Mr. Wilson: Perhaps I may deal with that as soon as I finish dealing with export credits.
Since 11th April a considerable number of exporters have been to the Department to discuss their problems. Most of these people are anxious to do their part in helping the dollar drive. To do this, they know they will have to make their goods known, maintain representatives in North America and arrange for distributors. Adequate stocks, especially of spare parts, are necessary, particularly in the case of large-scale engineering products. I hope that we are going to participate more and more in the tremendous programme of development which is going on in Canada. For this, surety bonds of substantial amounts will have to be put up.
To assist every reasonable project in connection with such things as advertising and other promotional expenditure, such as the maintenance of stocks and tendering for contracts, the Department stands ready to discuss any proposition which business concerns put forward. It is not only willing but anxious to help to finance the cost of those early years, and to carry any reasonable credit risk. I hope that the House will realise that this is a complete departure from anything which this Department has previously done. I told the right hon. Member for Aldershot, when we debated the Export Credits. (Guarantee) Bill, that I would report to the House any developments in policy.

Mr. Erroll: Will this Department be allowed to guarantee dollar risks without at the same time being given the chance to guarantee other area risks as well?

Mr. Wilson: Yes, Sir.

Mr. Erroll: It is an important improvement.

Mr. Wilson: We are making a lot of important improvements.

Mr. Erroll: It is about time, too.

Mr. Wilson: Perhaps I can deal with the point made by the right hon. Member for Aldershot about raw materials. As my right hon. Friend said this afternoon, until September it will not be possible to indicate in any detail what the import programmes for the coming year will be, but I think I can assure the right hon. Gentleman that in the operation of the standstill on new purchases—it was this about which he was asking and not


the longer-term programmes—we have taken very good care to see that sufficient raw materials will be imported so as not to prejudice the success of the export drive, particularly to the dollar areas. In the case certainly of the allocation of scarce materials, we shall see that the needs of the exporters to dollar areas are looked after first.
Another point on which there has been considerable discussion is the question of the long-term solution towards which we are working. An increase in dollar exports is at the same time a short-term and a long-term contribution to solving the problem. Hon. Members in all parts of the House have been dealing with the long-term objectives to which we should be working, and which will be in the forefront of the discussion in which my right hon. and learned Friend will be engaged in September. He made it clear, and I should like to repeat it, that in the view of His Majesty's Government our ultimate objective must be the establishment of a system of multilateral trade—a one-world system, not two or three. I think I can say that that view will be fully endorsed by all the other members of the Commonwealth. At the same time, I think it will be recognised by the House that a multilateral world will not be reached simply by wishfully hoping for a return to prewar conditions which made a multilateral system possible.
Before the war not only we in the United Kingdom but the greater part of Europe had a large deficit with the dollar area. Canada had a large surplus with us but a deficit with the United States. The whole of the financial deficits of those countries was met by two things: by the return on dollar investments and the net balance in favour of the sterling area resulting from the sale of sterling area raw materials and foodstuffs. It would be unrealistic not to realise that those two props of our pre-war system have been knocked away by the war. Moreover, the multilateral system depended upon the existence of large and adequate reserves in the sterling area. As my right hon. and learned Friend said this afternoon, that condition no longer applies. The smaller our reserves, the less is the margin for manoeuvre and for taking chances, or even for that dash to freedom

to which the hon. Member for Chippenham referred, although it was not very clear what he meant when he said it.
Those props of the multilateral system have been knocked away, and as part of any scheme to re-establish that system, we have to labour for something to take their place. It would not be right tonight, in advance of those September discussions—the more so as the Commonwealth financial meetings are on at the present time—to indicate what the lines of a solution must be, but I am sure the House will agree that to achieve a full multilateral system will require the freest possible movement of trade from debtor to creditor countries, the opening of markets to the fullest possible extent by creditor countries, the removal of tariff barriers by creditor countries, the achievement of the lowest possible costs and prices by debtor countries, and adequate provisions for investment abroad by surplus countries, whether private capital or by public organisation through national and international agencies.
In this country we have had a century's experience of what being a creditor nation involves. Our large surplus of export over imports throughout the nineteenth century was possible and was turned to productive use in the world at large by allowing free access of other countries' exports into our market and by a great volume of overseas investment, most of it risk capital. It is indeed difficult for us to adjust ourselves to the position of being a debtor on international account, and the readjustments called for in the trading policies of every country will be difficult to work out and difficult to apply. There is no doubt that fundamental readjustments will be necessary to achieve the multilateral system which we have in mind.
The right hon. Member for Aldershot referred to bilateral agreements. I was amazed at the vehemence with which he denounced them. He went so far as to say that they intensified and aggravated the dollar deficit. I do not think it is necessary to remind the House that our bilateral agreements of the last two years have been essential for maintaining the supply of food and raw materials to this country. When we recall the position of many countries in Europe only two years ago, countries which—

Mr. Lyttelton: May we hear what the right hon. Gentleman has to say?

Mr. Wilson: Certainly, Sir. There has been so much talking on the Tory Front Bench the last 10 minutes that I thought I had better address the rest of the House. My right hon. and learned Friend had to listen to a sermon from the hon. Member for Chippenham (Mr. Eccles) which I do not think was taken to heart by the right hon. Gentleman.

Mr. Lyttelton: We want to be able to listen to the right hon. Gentleman.

Mr. Wilson: Perhaps the right hon. Gentleman will listen to this—

Mr. Lyttelton: We want to hear the right hon. Gentleman. I am asking him to address some of his remarks to the Chair so that we can hear them, instead of turning his back on the Front Bench and addressing hon. Gentlemen behind him.

Mr. Wilson: Certainly, Sir. I shall ask the right hon. Gentleman to listen to this, and I shall take good care to see that he hears it. I hope he will take it in. It was pretty clear to all of us that in Western Europe at the end of the war the countries with whom we were trading were short of their usual export goods for their own purposes—Denmark was short of food and Scandinavia was short of timber—and would only be likely to put those goods into international trade and deny them to their own people on condition that could expect something in return which they required even more. We, for our own part, short of steel and coal, would only have been prepared to export those things on the scale we did provided that we could get foodstuffs and raw materials in return.
This is the first we have heard of the suggestion that the Tory Party is opposed to bilateral trade agreements. They have already made it clear on a number of occasions that they are not happy about a multilateral policy. What there is left without multilateralism or bilateralism, unless it is unilateralism, I cannot say. I would ask the right hon. Gentleman, do we understand from what he said this afternoon that he is opposed to the Argentine Agreement? [HON. MEMBERS: "Answer."] Because all the arguments he has used suggest that he is opposed to it. [HON. MEMBERS: "Answer."] We are used to not getting answers to the

questions we put to the Tory Party. If we are to interpret what the right hon. Gentleman said this afternoon, it is quite clear that the Tory Party can now go to the country on a new slogan—abolish bilateralism and cut the people's meat.

Mr. Eden: There is no meat to cut anyway.

Mr. Wilson: Perhaps the right hon. Gentleman has not seen what has been the first effect of the Argentine Agreement?

Mr. Eden: Invisible exports.

Mr. Wilson: To suggest that our bilateral agreements are operating to mollycoddle the economy, to wrap it up in cotton wool, is a proposition that simply will not bear examination. The sterling area itself, and the wider area trading on the basis of sterling, is the greatest multilateral trading area in the world at this time, and the lead and initiative taken by my right hon. Friend in O.E.E.C, proposing a further liberalisation of trade in Western Europe, will have the effect of letting the fresh air of competition through the industries to Western Europe, and I am quite sure that the right hon. Gentleman will applaud it.

Mr. Lyttelton: The right hon. Gentleman is making some remarks in favour of multilateral trade with which I agree. I think it is quite consistent with saying that I believe any extension of the bilateral system to be vicious. I hope that the right hon. Gentleman will now answer my question about a bilateral treaty with Russia.

Mr. Wilson: I am disappointed. I thought the right hon. Gentleman for once was about to answer a question that we put to him. I will answer the question.

Mr. Eden: The Opposition does not answer questions.

Mr. Wilson: Now we have heard a new principle enunciated in public life—the Opposition does not answer questions.

Mr. Eden: That is what you are all there for; you get salaries.

Mr. Wilson: We are here because we do answer questions and say what our policy is.

Mr. Eden: Answer this one.

Mr. Wilson: Certainly I will answer it, but first I should like to deal with the other point made by the right hon. Gentleman. He has called for more competition, more multilateralism. This proposition of O.E.E.C. is designed to do that, and what is the first thing we hear in this House about it? The hon. Member for Chippenham is against it because we are liable to see horticultural imports.

Mr. Eccles: I am delighted to have drawn the right hon. Gentleman. Will he now tell the House what are the commodities which he expects to import under this liberalisation?

Mr. Wilson: Yes, certainly, as soon as the discussions in Paris are a little further advanced.

Hon. Members: Oh!

Mr. Eden: Answer the question.

Mr. Wilson: Does the hon. Gentleman suggest that we should publish the whole of our list before discussions have begun? [An HON. MEMBER: "Just one."] What a suggestion! Perhaps I may now answer the question put by the right hon. Gentleman about the Soviet Union. He asked me if we had concluded a trade agreement with the Soviet Union. Of course he knows we did, on 27th December, 1947. I presume he meant, have we concluded a new one since? The answer to that is, "No." As I have informed the House frequently, discussions are proceeding, but no agreement has been reached between this country and the Soviet Union for a trade agreement, although a provisional grain contract has been initialled which will not take effect until the main agreement is reached.
It is clear from the speeches we have heard today that once again the Opposition have proved themselves quite innocent of any policy which they are prepared to advocate as an alternative method to the one we have followed. The hon. Member for Chippenham has been courageous and suggested scrapping the White Paper on Personal Incomes. I suspect that that is more because he wants to unfreeze profits than to unfreeze wages. He would not answer my hon. and gallant Friend the Member for North Portsmouth (Major Bruce), but perhaps he will answer me: Is that the policy of the Tory Party or is it his own personal suggestion? This is something we ought to know—but I forgot that the right hon.

Gentleman the Member for Warwick and Leamington (Mr. Eden) is present and that the Opposition do not answer questions.
Apart from dark hints about cuts in Government expenditure—and we still have no suggestions apart from school buildings in Devonshire and the groundnuts scheme—the right hon. Member for Aldershot says he thinks that the dollar problem cannot be solved by any conceivable increase in dollar exports. His guess is that the maximum increase, even if tariff barriers were swept away, would be some £40 million or £50 million.

Mr. Eden: Of manufactured goods.

Mr. Wilson: Of manufactured goods, certainly. But if that is his view, that the problem cannot be solved by increasing dollar exports, why do he and his right hon. and hon. Friends come to this House and pretend that the dollar crisis is due to our high costs in this country, to excessive Government expenditure and the level of the social services? It makes some of us think rather that they are advocating these policies not as a means to an end but as an end in themselves.
It is a fact that many of our difficulties today do result from high cost of production. I hope we can say to some of those industries who are still not willing to adopt the new methods which the situation requires that their fears of unemployment—which are based on very real memories; I am thinking of the cotton industry especially—should be set against this background: that there is no danger of general depression due to internal causes; no danger that we shall get back to a situation where a weaver is unemployed because he cannot sell his product and the unemployed miner in the next street cannot afford to buy a shirt.
The big danger of unemployment—and this has been said by hon. and right hon. Gentlemen opposite—in the cotton industry, for instance, results from the danger in our dollar situation that we might not at some future time have enough dollars to buy the raw cotton to avoid unemployment. This has been the theme of speeches and addresses to industry from all of us, I think, on both sides of the House for the last three or four years. By heroic efforts the restric-


tion in dollar expenditure which is now being applied can be worked in such a way as not to involve unemployment in Lancashire. But that danger has been only narrowly averted, and Lancashire is truly at the eleventh hour and at the 59th minute in the drive which is necessary to increase production.
The Opposition have not tonight—I hope that on Monday, when, I gather, the Leader of the Opposition may be speaking, they will—put forward a policy. I do not myself subscribe to the dangerous illusion, which is shared, I think, by some of my hon. Friends, that the Tory Party have not got a policy. It is quite clear from their speeches and their Press articles that their policy at this time would be one of chronic deflation and the reversion to a system under which a million or, perhaps, two million would be unemployed.

Mr. Eden: Would not the right hon. Gentleman agree that the reason why we do not have unemployment today is due entirely to American help?

Mr. Wilson: That point has been answered on a number of occasions. I think the House well recognises that the American aid which has been necessary since the war has been the direct result of what this country underwent during the war and the loss of our reserves.

Mr. Eden: I want to be quite clear, because we have to continue this Debate on Monday. Is it not true that Ministers have repeatedly said that the reason why we have not a million or a million and a half employed today is American help? Is that so, or is it not so?

Mr. Wilson: The right answer to the right hon. Gentleman's question is that it is perfectly possible, and is happening in Europe today, and I am certain it would happen under the right hon. Gentleman's party, to have both Marshall Aid and unemployment. Let me remind the Opposition that that question is being put at a time when our unemployment figures have fallen by another 40,000 to just over a quarter of a million; when unemployment in Scotland is down by 8,000 in the four Development Areas by 20,000, and unemployment in Wales is lower than at any time for a quarter of a century, apart from the war and the immediate post-war period.
The Opposition have had an answer to that question often enough and now I am going to ask them a question. Responsible Conservative leaders are advocating large cuts in Government expenditure. They know that nothing would be more inflationary than a slashing cut in food subsidies such as we suspect they have in mind. Will they get up and say that, whatever other items of Government expenditure they would cut—and they are very shy and coy about telling us what they are—they would not cut the social services, or food subsidies, at least until world prices for food come down and, further, that they would not cut the programme of providing factories for the development areas?
When we have an answer to that question we shall have a clearer idea of what their policy is. Responsible Tory papers are advocating cuts in expenditure scarcely less painful than in 1931. We know what that means—cuts in unemployment benefit, intensification of the Means Test—[An HON. MEMBER: "No shoes."] Yes, certainly it did mean that and if some of those hon. Gentlemen opposite who base their sneers on reading inaccurate accounts in the Tory Press will come with me to my constituency, I will introduce them to a thousand people who can produce evidence of children going without shoes. Let the "Daily Telegraph" print that one. People in that constituency, on the basis of the policy referred to by the "Sunday Times," were living on 10s. a week old age pension with a maximum of 2s. 6d. P.A.C. payment. I am talking about Liverpool. [An HON. MEMBER: "The right hon. Gentleman is leaving that."] I am not leaving Liverpool; that is what the Tory Chief Whip is doing. I am not surprised, when unemployment is now less than a quarter of what it was when the Tory Party were in power. I should leave Liverpool if I were Tory Chief Whip now. I want to ask the Opposition if they agree with that policy put forward by one of their leading newspapers?

Mr. Eden: What Tory paper?

Mr. Wilson: The "Sunday Times"; I have the cutting here. Is that the policy they are advocating, or will they rather foreswear this partisan anti-national policy we have heard today and join with us—

It being Ten o'Clock, the Motion for the Adjournment of the House lapsed without Question put.

Following is the document referred to by the Chancellor of the Exchequer [Cols. 676–677]:

Orders of the Day — BALANCE OF PAYMENTS TABLES

The attached tables have been prepared, for the information of the House of Commons, in accordance with the undertaking given by the Economic Secretary on Thursday, July 7th [OFFICIAL REPORT, Col. 2352]. They represent the best estimates at present available but all figures must be regarded as extremely tentative.

TABLE A


STERLING AREA GOLD AND DOLLAR DEFICIT


FIRST HALF 1949


£ million




January-June Provisional
Economic Survey
Difference


I.
United Kingdom






Imports
-207
-207
-



Exports
+88
+100
-12



Other payments and receipts (net).
-41
-23
-18



U.K. Deficit with Dollar Area.
-160
-130
-30


II.
R.S.A. Deficit with Dollar Area.
-37
-15
-22


III.
Gold and dollar payments to non-dollar countries.
-42
-50
+8


IV.
Total net gold and dollar deficit.
-239
-195
-44

Orders of the Day — YOUTH EMPLOYMENT (SCHOOL RECORDS)

10.0 p.m.

Mr. Boyd-Carpenter: I beg to move,
That an humble Address be presented to His Majesty, praying that the Regulations, dated 14th June, 1949, entitled the Youth Employment Service (Particulars) Regulations (S.I. 1949, No. 1118), a copy of which was laid before this House on 16th June, be annulled.
These regulations are made under the Employment and Training Act of last year, which, I think the Parliamentary Secretary to the Ministry of Labour will agree, was treated as a largely non-controversial Measure. Indeed, the only element of controversy that arose on the generally very amicable discussion of that


Measure was on the element of compulsion included in it. It seems to me and certain of my hon. Friends that these regulations are objectionable precisely because of that element of compulsion which, during the Debates on the Measure last year seemed to us to be the only objectionable features of that Measure.
The effect of these regulations, briefly summarised, is that they impose an obligation upon all schools, whether independent or part of the State system, to supply with respect to their pupils of a certain age, a very large number of particulars in accordance with the pro forma attached to the order, and they subject those who manage those schools to criminal penalties if they do not supply those particulars. That is the effect, and it is manifest that when such a duty is imposed on educational establishments and when that duty is backed by the imposition of criminal penalties in default that is taking a very serious step. I know that the Parliamentary Secretary will not controvert the fact that it is exercising a direct and forcible compulsion upon them.
The submission I make to the House is that so far, at all events, the House has not been favoured with any explanation of the need for such compulsion. I am certain that Members on both sides of the House will agree that in all cases in which it is sought to exercise compulsion upon any section of His Majesty's subjects it is necessary for those who seek to exercise that compulsion to show that there are good and sufficient reasons to justify it. As lawyers would put it, the onus is upon them to establish the need for that compulsion; there is no onus upon those who object to that compulsion. One of the objects of the discussion of this Motion tonight is to seek to inquire of the Ministry of Labour what are the reasons which in their view justify this quite serious interference with the liberty and discretion of those who conduct educational establishments in this country.
During the Debate on the Act under which these regulations are made we were given no indication whatever of the reason. Almost the only reference in that Debate to the particular subject matter of these regulations occurred in the speech of the Minister of Labour. He said:

We are placing one compulsory provision in this Bill. That is the compulsion upon the education authority to submit to the employment officer a report as to the capacity of the child. Most education authorities will be co-operating in this scheme and will therefore be reporting to themselves; but there may be schools outside, and we want them to tell us something about the children. All we wish to know is about the child's health, ability and progress at school, and any particular interests and aptitudes which he has shown. The information will be in the form of a report which will be a confidential document."—[OFFICIAL REPORT, 16th April, 1948; Vol. 449, c. 1375.]
That shows very clearly why the information is required. It makes no attempt whatsoever to show why it is necessary to exercise compulsory powers to elicit that information; and that is the particular point with which I would ask the Parliamentary Secretary to deal in his reply. I should have thought that those who conduct these schools, whether independent or part of the State system of this country, will freely co-operate with the Ministry of Labour or the local education authority in providing such information as may be necessary to help the Ministry in the conduct of the very beneficial scheme provided under the Bill. It would be a very grave reflection upon those who conduct these establishments to suggest otherwise.
There may, however, be cases where, for one reason or another, schoolmasters and the managers of schools may desire not to give full information. It is known, particularly in the case of difficult children that teachers are apt to feel that their relationship to both pupil and parent has something of the same confidential nature of that of confessor to penitant. Teachers feel there are certain matters confided to them which they cannot divulge to third parties without the express and definite permission of the parents and perhaps the child itself. Yet here is the Minister of Labour saying, "If you adopt that attitude we shall subject you to penalties in the courts as laid down in subsection 4 of Section 13 of the Act of 1948."
There may be such case and I would ask the Parliamentary Secretary whether he anticipates the slightest difficulty in obtaining voluntarily from the schools all the information which he reasonably needs? Has he any evidence to lay before the House of the scheme being hampered in its working by reason of the deliberate refusal by schools to give


such information? If he has then that information is clearly material and relevant to the Debate. I hope he will give it to us with precision, and tell us the type of school which refuses to co-operate. If the Parliamentary Secretary has no such information I hope he will tell us what is the reason for taking these compulsory powers.
I do not wish to seem unreasonable or obdurate in the matter. If real difficulties have arisen let us hear what they are and consider whether it is right for the Minister to have these compulsory powers. But if, as I suspect is the case, schools are co-operating, and have given every indication that they will co-operate freely in this matter, perhaps he will tell us why he requires the power to compel them to co-operate. I would like to know what consultations he has had so far as the independent schools are concerned. Has he taken the views of the Governing Bodies Association, or the Headmasters' Conference? So far as the State system is concerned, what are the views expressed from the Ministry of Education? Has the right hon. Gentleman consulted with bodies specially interested in this matter, such as the National Union of Teachers? I do not for one moment assert that these consultations have not taken place. I should like to know what the results have been.
Those are the matters which I desire to deal with tonight. I start, I confess, with the old-fashioned attitude, as perhaps it is nowadays, that it is wrong to exercise compulsory powers unless one must, and that it is much better to seek voluntary co-operation. I suggest to the Parliamentary Secretary that if he gets the co-operation of those who run the schools, he will get reports of some value. Does he really think that a report given only under the threat of criminal penalties from an otherwise unwilling school will be worth the paper on which it is written? Does he really think that the delicate, complex assessment of a child's character and abilities which is required in this report is the sort of thing which one can simply order a school or a teacher to produce? Is it not the experience of human nature that such reports, if compulsorily obtained, are generally quite worthless? Is it not much better to seek the voluntary co-operation

of the schools, and only to come back to this House and ask for compulsory powers if the voluntary approach fails?
I address this appeal to the Parliamentary Secretary. I do not seek to make any party political point. It certainly is the tendency nowadays in many countries to place in the hands of the Government detailed and inquisitorial powers of this sort over the people's lives, to seek to tabulate the facts and the details about every person, to strip the little veils of privacy from the lives of all of us, in order that each Government Department may have all of us neatly card-indexed for whatever purpose it requires. That is the prevailing tendency. I am very sorry to see it introduced into the working of an Act which I regard as a good Act and which, as the Parliamentary Secretary knows, in my humble way, I sought to support when it was before the House. It is because I hope that the Parliamentary Secretary will either explain these matters or banish this blot of compulsion from an otherwise fair picture, that I have moved this Motion.

10.13 p.m.

Sir John Mellor: (Sutton Coldfield): I beg to second the Motion.
I associate myself with the general case put forward so well by my hon. Friend the Member for Kingston-upon Thames (Mr. Boyd-Carpenter). I should like to draw attention to certain parts of the order. First, I wish to refer to the phrase:
pupils to whom these Regulations apply.
That expression is defined as:
… pupils attending that school who are within six months of the date on which they will attain the upper limit of the compulsory school age applicable in their case and who are likely to leave school on attaining the upper limit of the compulsory school age.
That definition contains the expression:
… and who are likely to leave school on attaining the upper limit of the compulsory school age.
That is an extraordinarily vague expression to put into an order. It is something which cannot possibly be a question of fact: it is merely a question of opinion. I object to an order which is enforceable on a penalty of £10 as a criminal sanction, if it contains such an extraordinarily vague expression. The Schedule contains particulars which proprietors of schools are required by the Minister to furnish.
Under "Health and Physique," information is required on general health of the pupil, and further, whether or not there is an physical disability. It is an extraordinary thing that the proprietor of a school should be required to express an opinion on the general health of a pupil, and, more especially, on whether the pupil suffers or does not suffer from any disability. Surely that should be a matter for a doctor, and not for the proprietor.

Mr. Bechervaise: Would not the hon. Gentleman agree that the information given to the Employment Service is likely to help in obtaining work—knowledge of the health of the child?

Sir J. Mellor: I think it should be obtained from the proper quarter, and that information about health and physical disabilities, if required at all, should be obtained from the doctor and not from the proprietor of the school.

Mr. Bechervaise: Should it not be based on the health record card of the school?

Sir J. Mellor: That is a matter of opinion, but the hon. Gentleman will perhaps have the opportunity of developing the point later.
Information assessed on school work, on other activities, and by test is also required. If given, further information is sought whether the general ability is high, average or below average. What is meant by "average"? Average of what? Average over the pupils in the school, or average over boys or girls of that age throughout the country? I would like to know from the right hon. Gentleman, who seems to think that this is slightly amusing, what is meant by the word "average"? Does it mean that the proprietor of the school has to take an average of the pupils of that age in his school, or what he believes to be the average of boys or girls of that age in the nation as a whole? I am quite certain that every proprietor would ask himself that question in endeavouring to answer all the points in the schedule.
Next, aptitudes. I hope hon. Members in all parts of the House have copies of this order, because I have read this part of the schedule which is headed "Aptitudes" and have not been able to understand what it is driving at. It begins:

on the whole: verbal/practical/neither predominant.
Then, on the next line:
specially noticeable: words figures mechanical manual other bents (e.g. drawing, music, domestic).
Perhaps we may get a clue from the last line, but it seems to me to be a most extraordinarily vague affair.
Finally, I think it is a very serious matter to trust this confidential information even to officials of the highest importance and character. It is really essential that its non-disclosure should be secured. The penalty provided under Section 13 (4) of the principal Act is only that of a fine not exceeding £10 on summary conviction, which I do not think is an adequate penalty to secure the secrecy of these details. I therefore object to this order, and I think that if the information has to be obtained it should be obtained voluntarily, or, far better, from the parents.

10.20 p.m.

Mr. Kenneth Lindsay: I wish to support the protest which has been made against these regulations. I followed this Act with some care—indeed, I had some little responsibility for helping to get the name changed—and then raised the question on the Report stage in an Amendment providing that
such particulars shall be made available to the parent or guardian of any pupil concerned in this Section of the Act.
In that Amendment, I had the support of many Labour Members, including the hon. Member for Ince (Mr. T. Brown) and the then hon. Member for Rotherhithe, and, I believe, the hon. Member for West Fife (Mr. Gallacher). At the end of the Debate, the Parliamentary Secretary persuaded me to withdraw the Amendment on the understanding that there would be included some definite right accorded to the parent. In these regulations we have the following sentence:
All particulars furnished by virtue of the the foregoing provisions … (which permits under certain conditions parents or guardians of pupils to examine the particulars in the presence of the officer having the custody thereof).
I think this is a complete blot on an otherwise perfectly good Act. I ask that it should be the right of the parent to see the whole of this school record. Frankly,


I am more worried about this than about anything that has happened since I have been in this House. This is the beginning, or may well become the beginning, of a dossier. Just think what is recorded about a child—and this is recorded about all children—not only their health, but their aptitudes, their abilities, and a whole series of other points about their life history. This is going from one official to another and the original document which produced this Measure, the report of the Committee on Juvenile Employment Service, the large majority of whose members were civil servants presided over by Sir Godfrey Ince, Chairman, Ministry of Labour and National Service, said:
The balance of advantage lies in having one record and passing it from the school to the Juvenile Employment Service. It should, however, be permissible for an Authority to adopt a system of sending forward an excerpt or digest. …
I think that the sending of a digest is about the most dangerous thing in this world.

The Parliamentary Secretary to the Ministry of Labour (Mr. Ness Edwards): I am sure the hon. Gentleman does not wish to do anybody an injustice. There was only one civil servant on the Ince Committee; he is quite wrong when he says that the majority of the members of that Committee were civil servants.

Mr. Lindsay: The second person on the list is a civil servant, Mr. Wallis, who was succeeded by Mr. Bray who has been in the Civil Service for 20 years. Then there is a whole host of friends of mine who are local government servants. I am saying that the majority of them are in local or national Civil Service.

Mr. Ness Edwards: Mr. Ness Edwards indicated dissent.

Mr. Lindsay: The right hon. Gentleman shakes his head. I am not saying this idly; I have looked through the list. These are questions which affect the life of the community. There is much talk about bureaucracy which I think is idle, but there is also some significance in that talk. I think it is a dangerous business to allow a report to go through the school to the youth employment officer, and which goes on through the whole of the boy's life. It follows him to the university now, because, in the modern university entrance, he is most likely going to

have a scholarship. In other words, it is coming right through, and I am not sure that I want a private dossier going to employers and to the university, a dossier which covers a boy's whole life and which the parent can see only if he goes to the office and sees it in the presence of the youth employment officer.

Mr. Percy Wells: Will the hon. Member point out where it says that this will go to the employer?

Mr. Lindsay: It says:
All particulars furnished by virtue of the foregoing provisions of these Regulations, subject to the provisions of paragraph (2) of this Regulation, remain in the custody of the Minister or the authority to whom they were originally furnished and shall be used only for the purpose of giving adequate advice and assistance to the pupils to whom they relate. …
When the youth employment officer is discussing the boy's future career, will he not have a discussion with the employer on the facts of this case? This is supposed to be a private confidential discussion. Does he reveal nothing? Does he say nothing to the employer about the boy's previous history? Of course he does.

Mr. Wells: Surely he can do so without this regulation.

Mr. Lindsay: Then why put it in? And why prevent the parent from having a copy of this in his own home? That is the main point I wish to make. The object of my Amendment was to see that the parent should have a right to have this knowledge in his own home, and that is where the hon. Member for Ince and other hon. Members were sympathetic. The Parliamentary Secretary is not the sort of person who would be disposed to prepare the way for a State, whether totalitarian or not, where private rights are dismissed. He is not that sort of person. Why has he, and Lord Hall in another place, allowed this to go through? I thought we should get some sympathetic treatment about this so I withdrew my Amendment, but all we have received is the statement that the parent shall have the right to this information in the presence of the officer. He has to go to the youth employment officer and sit and look at the record and then go home and try to memorise it—and it is about his own boy!

Mr. Sparks: Is it not correct that at the present time a record is maintained in the schools? Is that record available to the parent of any child?

Mr. Lindsay: Yes. The argument put forward earlier by the hon. Member for York (Mr. Corlett) was that any parent can go and talk over the record of his boy with the schoolmaster in the later stages. That is not good enough. That is a dossier. I have been in countries where every person in the State has a dossier. I do not want it to happen in this country. It is the most dangerous thing in the world; something is known by somebody about other people. Imagine if it were known about every hon. Member in this House and nobody could get at it. That is what I saw with my own eyes and it is a very dangerous business because it immediately breeds suspicion between man and man.
I do not want to talk a lot of extravagant Gestapo nonsense, but I say that hon. Members of this House have to look very carefully at any inroad into the private liberties which affect the relations between parent and child. This is material which can go out as a private record—not only a physical record but also a mental record. For instance, a person may be, as happens so often, a little bit unbalanced between the ages of 11 and 14, yet many such persons turn out afterwards to be considerable persons in the community. Who knows? How dare it be suggested that that record should be kept from the private knowledge of the parent of the child except through an employment officer?
If I have spoken with some heat it is because I think it is one of those small occasions where there is a danger of personal liberty being trampled on. I ask the Parliamentary Secretary to take these regulations back and to amend Section 13 so as to make it obligatory to give the information to the parent. I do not know how it is to be done—by amending Section 13 of the Act, I suppose.

Mr. Speaker: The hon. Gentleman cannot say that Section 13 of the Act must be amended.

Mr. Lindsay: I am sorry, I was going a little beyond the bounds of Order. Take the regulations back. Then, later, deal with the Act, and make it absolutely clear

that parents have a perfect right to see the record of their children and to have that in their own home and not only by permission of the youth employment officer. That is why I am against the regulations.

10.31 p.m.

Mr. George Wigg: The hon. Gentleman has clearly destroyed his case by his own exaggerations. He has been trapped by the strength of his feelings into one or two rather strong statements. I am sure he would carry every parent with him in deploring a permanent assessment of a child which is still developing. Surely it is just for that reason that the people who are expressing their views about the aptitude and ability of a child do not want to disclose it to unauthorised persons. Particulars are being taken for the information of those people who want to help and guide a child into a fruitful job. If that information was broadcast or put out willy nilly, the child itself might come to regard itself as, for instance, below average. That would be in every way deplorable.

Mr. Lindsay: I do not ask it to be used willy nilly or broadcast. I simply ask that parents should have an equal right to see it.

Mr. Wigg: The parent has a right to see it.

Mr. Lindsay: Under conditions.

Mr. Wigg: Under conditions; but if we are going to have a duplicate copy supplied to parents, the people giving this information are going to be extremely guarded, or less than candid.

Mr. Lindsay: Why?

Mr. Wigg: Obviously they are. It is the tendency, and rightly so, for every parent to regard his or her child as the "tops." If, therefore, the master supplying information puts down that the child is below average, he might be faced with a storm.

Mr. McCorquodale: I am sure the hon. Gentleman does not want to malign the teaching profession, but he is saying, so far as I can gather, that the teaching profession would modify their reports if they knew they were to be seen by parents. That is a monstrous thing to say. Surely the teaching profession is prepared to speak the truth about the child?

Mr. Wigg: In the course of my life I have written a few thousand confidential reports, and one thing I am sure about confidential reports is that they much more reflect the personality of the person who is writing them, than that of the person who is reported on.

Mr. McCorquodale: The hon. Member has blown the whole thing sky high!

Mr. Lindsay: Why have them?

Mr. Wigg: That is another matter. We are now dealing with the distortions of the hon. Member for the English Universities (Mr. K. Lindsay). He has made a serious charge. He says this is the foundation for dossiers. The motive behind the Minister is of the best. He wants to help these children. If the hon. Gentleman has constructive proposals to put forward, my right hon. Friend will listen to him, but he ought not to make charges of that kind.

Mr. Lindsay: But I put forward an Amendment which was turned down. It is no good saying that I have not put forward a constructive suggestion.

10.35 p.m.

Mr. McCorquodale: We on this side welcomed the Bill when it came before the House. We thought that it was an excellent step forward, in the main. We did not regard it is a party measure. I was careful to state that on Second Reading. All hon. Members want to asist the valuable Youth Employment Service, and we are all grateful to my hon. Friend for getting a reasonable title for the service. I am sure that everyone wants to see everything possible done to ensure that the young men and young women of this country get into suitable jobs, so far as that is possible. To get them into jobs suitable for their aptitudes is one of the most important things from an economic point of view, as well as for the happiness of the young people concerned.
But we did take exception—led by my hon. Friend (Mr. Boyd-Carpenter)—to the original Clause with regard to the compulsory and secret nature of these reports on the boys and girls. We drove the Minister, as the House will remember from the quite untenable position which he had been put up to defend. By a concerted attack from all sides of the House, we made the Minister agree to take back his original proposals. For the great

majority of those in the House at that time agreed, in the Debate on this non-controversial measure, that to withhold from the parents the right to see these compulsory reports would be totally wrong. Indeed, some hon. Members from all parts of the House expressed themselves with considerable vigour on that point, as we well remember.
The Minister promised to take the matter back and to put it right in another place, and on that promise being given, my hon. Friend withdraw his Amendment. But the Minister carried out the very minimum of his promise, and did that very grudgingly; and I said so at this Box when he brought the Amendments back from another place for us to agree to. Now, he comes with these regulations, made as wide and sweeping as they can possibly be, to be squeezed into the four corners of the Act which he has to administer. I cannot help feeling that the officials in the Department who were advising the Minister may have been very annoyed at his withdrawal in the face of the concerted attack in this House, and that they made him come to heel, as far as possible within the latitude we had given to him.
Seriously, I am making this charge. I dislike this method of getting the absolute maximum out of what this House has allowed to pass in this way. I do not believe that any hon. Member actually likes these proposals. We all see the value of reports, although the hon. Member who has just spoken does not think very much of them. Possibly he has had a good deal of experience. But I do not think any hon. Member likes the compulsory nature of these proposals, with the fines behind them to be inflicted upon people who do not respond in toto. I myself do not like this form of report—some people do not like the word "dossier"—which the headmaster or headmistress has to fill up.
The more I study this matter, the more I dislike this compulsory, secret, or semi-secret reporting upon these boys and girls. I believe I have a good deal of agreement upon that from hon. Members in all parts of the House. I am only speaking for myself, but my dislike continues, and may continue for a considerable time. Who knows what hardship, what millstone may hang around the neck of a boy or girl until 21 years of age—when, thank God, these reports have to


be destroyed—by reason of some unfortunate remark in these reports?
My hon. Friend raised a good point with regard to the health of the pupil. No layman can accurately judge the health of a human being. We see in front of us a number of apparently healthy people, but who knows whether, in fact, they are healthy or not? When young people are growing up and passing through adolescence, it is extremely difficult for a layman to prophesy what the state of health of that adolescent will be in at 18, 19, or 20 years of age; and for a layman to write that the general health and vitality of that pupil are below average, and for that report to go through while he is seeking employment, is extremely dangerous. He may well be passing through some adolescent disturbance, and his general health may be excellent in more mature years.
Let the Minister take this back and bring it out again in a much more simple form, without these compulsory powers behind it. A brief guide may be of use; a detailed dossier may be dangerous. There are right hon. Members on both our front benches who, if reported on at the age of 15 years, might never have gone into the political world. [Laughter.] It is easy to joke, but the position is serious. When we are seeking compulsory powers to force headmasters and mistresses to answer questions which they might not wish to answer for perfectly valid reasons, we are doing something which is wrong, as my hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said so eloquently. I do not believe it is right, and I do not like it.
There are one or two small points on which we should like guidance. Are all schools to fill up these forms? Have all headmasters to use them? Are local youth employment committees or education authorities to find this information and chase it back? What is the position of the governing bodies and the Headmasters' Conference with regard to this matter? Have they made any representations? Have their views been sought on this subject? I ask the Parliamentary Secretary to answer these points. I wholeheartedly agree with what has been said from the benches behind me. I frankly do not like this compulsory business and this secrecy, and I believe

it goes far to mar what otherwise would be a very useful Act.

The Parliamentary Secretary to the Ministry of Labour (Mr. Ness Edwards): We have had a very useful Debate. The Prayer was moved in a very prayerful way but, I think, without the precision that one usually associates with the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). My predecessor in this office has laboured very hard, and has had to dig up a lot of the Debate which took place on the Bill, in order to be able to indulge in some criticisms. Then we had the extremely intemperate outburst by the hon. Gentleman, the Member for the Combined English Universities (Mr. K. Lindsay). I would remind the House that what is provided for in these regulations is provided in Section 13 of the Act, and all these regulations do, in so far as they apply compulsion, is to carry out the purpose of the Act. As was rightly said, this matter was discussed at great length.

Mr. Boyd-Carpenter: If the right hon. Gentleman will look at Section 13 of the Act, he will see it provides that the Minister may make regulations to this effect. There is no compulsion upon the Minister to make regulations having any compulsory effect. That is the point of our Motion.

Mr. Ness Edwards: I shall come to that, and I think I shall be able to confute the hon. Member for Kingston-upon-Thames by the declared policy of his party in relation to the compulsory element in this Bill, as enunciated by the right hon. Gentleman the Member for Epsom (Mr. McCorquodale), who was leading for the Opposition.

Mr. Boyd-Carpenter: That is quite a separate point.

Mr. Ness Edwards: Well, we shall be dealing with that point. First of all, let me deal with the question of bad faith—a serious allegation. We were pressed time after time during the Committee and on Second and Third readings of the Bill to make sure that these reports would be destroyed, that they would not be kept for all time to follow the youth through the rest of his life. That was the argument which was accepted by the House for not providing copies of the reports for parents. The Bill, as it then was, provided


for the destruction of the reports after a certain time. The Government, or the Ministry, the education authority, or the Youth Employment Service in the various parts of the country, could only destroy those reports, if they were in their possession. It was that point which the hon. Gentleman the Member for the Combined English Universities himself accepted on Third Reading as being a valid point for not providing a copy for the parent.
Let me remind the hon. Member of the phrase I used. This is in the OFFICIAL REPORT of the Third Reading. I said:
I think it is agreed on both sides that copies of this report ought not to be made.—[OFFICIAL REPORT, 26th May, 1949; Vol. 451, c. 236.]
That was accepted by the House. What I undertook to do was that provision should be made whereby parents should see what was written about their child. To safeguard the child the House accepted the view that no other copy of the report should exist except the one in the possession of the authority, and, that after a certain time, it should be provided for in the Act, as it now is, that that report should be destroyed. That went through the House without any vote against it at all, and I understood that the point of view was never challenged, when we came to the Report stage and later when the matter was referred here from the other place.
I come to the argument of the mover of the Motion. He asked, quite rightly, whether any case was ever stated for the use of compulsory powers. I should like to quote to him what his right hon. Friend said about the use of these compulsory powers:
I hope that hon. Members will follow the advice of the Minister. It was only after considerable discussion and anxiety that we on this side of the Committee were prepared to accept this measure of compulsion; because it was to be operated by one single authority, and therefore would be operated fairly all over the country."—[OFFICIAL REPORT, Standing Committee A, 11th May, 1948; c. 75.]
That is the statement made by the right hon. Member for Epsom, and I am rather surprised that tonight he should run away from the declaration he made on behalf of his side of the Committee.

Mr. McCorquodale: The Parliamentary Secretary has read out words I

used in the Debate, as he is perfectly entitled to do; but I should not have thought that what I said was a very high appreciation of compulsion. We had to accept the lesser of two evils. That was the trouble. We had either to accept that, or get something very much worse.

Mr. Ness Edwards: That is a very queer explanation. But there are other quotations which could be given from the right hon. Gentleman's speeches. Let me give one from the Second Reading:
I wish to refer to the report on the boy which is to be compulsorily demanded from schoolmasters. If the juvenile employment officer, and his advisers, are to deal satisfactorily with young men and women, it is necessary they should know as much as possible about them. Therefore, I am glad to see that a standard form of report is to be prepared."—[OFFICIAL REPORT, 16th April, 1948; Vol.449, c. 1383.]
This is in connection with the discussion that a standard form of report is to be demanded from all the public and private schools in relation to the operation of the scheme. There is the declaration by the right hon. Gentleman, on behalf of the party which is praying against this scheme and complaining about this element of compulsion which, I repeat, was discussed many times. The right hon. Gentleman understood that it was to be a compulsory obligation on the part of headmasters of all schools, and it was accepted by the Committee unanimously. The hon. Member for Kingston-upon-Thames shakes his head, but that was the position. I say that these regulations carry out completely the intentions of the Committee, and of the House, in connection with the operation of the youth employment service.
I was asked a number of questions. I was asked whether or not there was any reference made to compulsion other than by my right hon. Friend. The hon. Member for Kingston-upon-Thames will realise that this question was discussed on Second and Third Readings, as well as during the Committee stage, and was thoroughly hammered out, because there were a number of Amendments dealing with the form of this compulsion. He is quite wrong in saying that this matter was not dealt with adequately.

Mr. Boyd-Carpenter: The Parliamentary Secretary has completely misunderstood my argument. I did not say there had been no reference. What I said was


that no grounds were given for the necessity for this compulsion. So far, no such justification has been given tonight.

Mr. Ness Edwards: The hon. Member said that the only reference was that given by my right hon. Friend, but I have already quoted what his right hon. Friend the Member for Epsom said in declaring his party's support for this compulsion.

Mr. Boyd-Carpenter: No.

Mr. Ness Edwards: I am sorry if I am taking it too far, but I have quoted the words which were used, and the House must judge. I do not seek to do an injustice to my opponents in Debates; I like to be as fair as I can.
I was then asked whether adequate consultations took place. Hon. Gentlemen on both sides of the House know that the Act provides for the setting up of a Youth Council. That has been set up, and its duty is to advise the Minister. During discussion on the Bill we had a considerable number of suggestions about who should be on the National Youth Employment Council. There are represented on it employers, work-people, youth employment committees, independent representatives, representatives of the County Councils' Association, the Association of Education Committees, the Association of Municipal Corporations, London County Council, the Association of County Councils in Scotland, the Welsh Federation of Education Committees, and the National Union of Teachers. Among the representatives is Mr. Wolfenden, who is a very distinguished headmaster. There is a long list of very substantial people on the National Youth Employment Council, which considered this form and the type of information which would be required from headmasters. They took a long time to come to their conclusions as to the nature of this form and the schedule of information.
I think it will be agreed on all sides of the House that the ladies and gentlemen forming the National Youth Employment Council are specialists in their field. I would assure hon. Gentlemen opposite that the members of the Council are not predominantly of the same point of view as my hon. Friends on this side of the House, so that there is no political bias at all. The members of the council started to examine the nature of the information which would be required on

7th July of last year, and did not come to their final conclusion until 23rd March this year. Members of the Council were given the opportunity of submitting a draft of the form to their educational associations which they did; and the final form represented a unanimous opinion. What more could the Ministry do in connection with the production of a proper form than to accept the advice of a Council of extremely eminent people in whom authority is placed by the Act to advise the Minister? What more could the Minister do than, having considered the advice, issue a form in the way he has done?

Commander Maitland: Did the council make any representations on the question of compulsion?

Mr. Ness Edwards: As compulsion is in the Act itself—

Hon. Members: No

Commander Maitland: Surely the Act says "may."

Mr. Ness Edwards: As compulsion is in the Act itself—the word "may" being used in the way in which it is usually used in Acts of Parliament—

Mr. Deputy-Speaker (Mr. Bowles): When discussing regulations no reference can be allowed to what is in the Act, or, strictly, what led up to it and what was meant.

Mr. Ness Edwards: The trouble is that this Prayer is really directed against the Act. [HON. MEMBERS: "No."] Well, against Section 13 of the Act, which provides for the compulsory powers, and this regulation is being prayed against because it contains the element of compulsion. I am in the great difficulty of having to deal with a Prayer which is really aimed at the Act, as the hon. Member for the Combined English Universities let slip, and at the same time, trying to keep in Order. However, I will leave the point and try to argue as best I can.
There are one or two other points with which I should deal—

Mr. Boyd-Carpenter: Before the right hon. Gentleman continues, is his answer to my hon. and gallant Friend the Member for Horncastle (Commander Maitland) that the very distinguished people he consulted on the form were not consulted on whether the return of the


form should or should not be compulsory?

Mr. Ness Edwards: As the Minister has the obligation placed on him to obtain this information, it would have been quite outside the jurisdiction of the National Youth Employment Council.

Mr. Boyd-Carpenter: Then is the answer "No"?

Mr. Ness Edwards: I have not got advice on the point, but I should assume that the answer is "No." I think the House understood that in providing for this, we were taking compulsory powers in this connection.
I come to one or two other matters. First, in regard to detailed criticism of the Schedule, we are advised that this is the correct method of obtaining the best information about the boy or girl to whom it is intended to give advice. It is experimental. A circular of guidance will be issued to headmasters to assist them in filling up this form and I should have thought that a very good first shot in an endeavour to get some experience of the working of this scheme. I am not wedded to it and my right hon. Friend is not wedded to it, but let us have some experience of it. The National Youth Employment Council will keep this in mind and be watching it all the time. I am sure that if they find they are getting something they ought not to have, or are not getting the things they ought to have, they will suggest Amendments to the Schedule.

Sir J. Mellor: I asked a direct question—what was intended by the word "average"? Will the right hon. Gentleman reply to that?

Mr. Ness Edwards: I was dealing with the matter in a general way by saying that a circular of guidance will be issued to headmasters. "Average" means the average for boys or girls of the same age in the school.

Mr. K. Lindsay: Schools differ greatly. The average of physical health in a favoured, privileged, area, where children have every advantage, is tremendously different from that in another area. That is an argument for flexibility.

Mr. Ness Edwards: I quite agree, and there is that flexibility, for the headmaster

is giving the average for his own school, whether it is of health or aptitude. I should have thought it could have been left to the good sense of the headmaster, who knows what is meant by this sort of thing.
It has been alleged that the Ince Committee is composed of civil servants. I have checked that up and find that there are four civil servants and 12 who are not civil servants. It is suggested that the form will go to the employer, but that is not so. The Act prevents the information being passed on to the employer; no one will see the report other than the parent, guardian, or youth employment officer.

Mr. McCorquodale: And the school inspector.

Mr. Ness Edwards: The school inspector, yes, people in the school. I have dealt with the question of taking copies home. In view of replies I have given to Questions put recently on the matter, I hope the House will accept our assurance. This is a new field and is largely a great social experiment. We are getting the best advice we can. We have regard to the necessity to safeguard the interests of the individual; there is no desire that any dossier should follow anyone. The Act prevents a dossier following anyone.

Mr. Lindsay: Up to the age of 21.

Mr. Ness Edwards: There was an argument about the age when we discussed the matter originally. We settled this point, and I do not want to go over it again. I wish the arguments we had over these issues were not raised at a time when I am unable to reply and remain in Order. In those circumstances, I ask the hon. Gentleman the Member for Kingston-upon-Thames to withdraw his Motion. We shall keep an eye on this. There will be an annual report made on the operation of this experiment. If there are difficulties, if we can find greater safeguards, if new suggestions arising out of experience come forward, then there will be an opportunity of discussing perhaps the recasting of this regulation or any others.

Commander Maitland: Would the hon. Gentleman elucidate something which puzzles me. The main object of the report is to assist the juvenile employment officer. The interview itself is not com-


pulsory. Why is the provision of the information compulsory? Should it not be provided only in those cases where the interview is held?

Mr. Ness Edwards: Here, again, we are in great difficulty. There was an Amendment, when we were discussing the Bill, on this very point, but I am afraid I should be out of Order in traversing again what has taken place.

Mr. Boyd-Carpenter: I cannot say that I am completely satisfied by the right hon. Gentleman's reply, although I would say at once that I very much appreciate the tone of his concluding sentences. I agree with him that this is a social experiment of very great importance, and the only part of the matter which still seems to me highly disputable is this element of compulsion. I do not want to press this matter, if I can avoid it, to a Division, which would undoubtedly place it on party lines, because I do not regard this is any sense as a party matter, The last thing I want to do is to harden the attitude of the hon. Gentleman and his Department against the point of view I have been seeking to put forward.
I would express the hope that in the consultations he has already indicated he proposes to take part in with the very able people upon whom he can call, he will also include, in those consultations, a reconsideration not only of these regulations in general, but of the compulsory element in particular. It is because I hope that he will do that that I do not propose to press the Motion to a Division. [Interruption.] I am sorry if hon. Gentlemen opposite regard this as a matter to be treated in this way. I treat it seriously, as the Minister does, and I am hoping very much that the right hon. Gentleman and his Department will pay attention to what has been said in the House tonight. For that reason, while I do not think that the hon. Gentleman's reply is sufficient for me to withdraw, I am content that the Motion should be negatived.

Question put, and negatived.

Orders of the Day — BRITISH CRAFTSMANSHIP

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Joseph Henderson.]

11.9 p.m.

Mr. Skeffington-Lodge: I want to raise tonight a subject which seems particularly appropriate on a day on which the economic position of the country has been discussed. I refer to the question of British craftsmanship, its present decline, its possible revival, and some aspects of it which particularly affect my own constituency in that regard. The subject is, I know, a very big one, and I can obviously only touch on the fringe of it in the course of my remarks. First of all I wish to make some general observations so as to present to the House the broad picture of the setting of my speech. Then I hope to direct my hon. Friend's attention to one or two specific matters about which I believe he can give us some help and encouragement. Finally, I want to say a word about the developments already referred to in my constituency, which shows what can be done locally, and which may encourage others to be active in the same way as people are active in Bedfordshire.
We all know of the disappearance of the spacious and gracious living for those who once enjoyed it, and of the disappearance of all chance of its revival for those people and others who, in the past, ought to have enjoyed more of it. In place of it, what have we got? A suburban-minded vulgarity is cursing millions of our people, turning many of them into automata who appear to react only to the blandishments of Hollywood or the appeal of all-in wrestling or the dogs. The invention of the internal combustion engine and the discovery of electric power really started the rot, but the decay of religious practice and the neglect of good reading are partly contributory factors, as is also the general press of world events. Speed and noise can never help in raising the standard of taste and culture anywhere. It is a tragedy that the rise in the standard of living has in many cases led to a landslide in the quality of the personal standards of our people.
No one has any time to stand and stare in these days, least of all we Members of the House of Commons. That is a very bad thing, for unless a person can


stand back from the events surrounding him it is not easy to see them in their proper proportions. Small wonder, in the circumstances, that we are not producing any more Chippendales, or anyone the equal of Sheraton, the Durham cabinet maker, or of Wedgwood, the humble rural potter who has influenced the world. I recently read an account of trap questions set by the Town Planning Institute to young planners taking one of its examinations. These youngsters were invited to give advice to the council of an old agricultural village proposing to turn the village pond into a model yachting pond, with a fountain, concrete paths and flower beds. Ninety per cent. of the candidates lovingly and tenderly elaborated their refinements of vulgarity to almost unendurable degrees, even specifying the kind of crazy paving they would use on the paths.

Mr. Deputy-Speaker (Mr. Bowles): I am sorry to interrupt the hon. Member, but where does the Government responsibility for all this come in?

Mr. Skeffington-Lodge: I am leading up to that, and to asking my hon. Friend who is to reply to support and encourage the view I will shortly express. These youngsters detailed the shrubberies, privet hedges, begonias, and all the rest of their confectionary, and thereby, I suggest, reflected the outlook and standards of many in our country. It is against this background that we must view the noble efforts of the Rural Industries Bureau and British Handcrafts Export Council, to which the Government contribute financially. The latter recently staged an exhibition in the Drapers' Hall, attended by the American Embassador, at which the right hon. and learned Gentleman the Chancellor of the Exchequer spoke. His wife, incidentally, is chairman of the Council which is running this excellent organisation.
Power, in the old-fashioned meaning of the word, seems to have passed from us for ever, on the one hand to Soviet Russia and on the other hand to the United States of America. What are we left with? We are left with the opportunity of developing on a quality basis, and it is all the more vital, in these circumstances, that we should impress on the rest of the world those standards which have hitherto always been associ-

ated with our goods and with our national character. I believe we can still compete on a price basis in many cases if we really go in for more thorough-going industrial reorganisation. I am certain, however, that, despite the somewhat gloomy picture I have painted, it is not too late to recapture the former high standards for which British craftsmen have always been noted.
But many things besides those I have mentioned are being done to kill the tradition of craftsmanship which used to be passed on from generation after generation. Why, I ask my hon. Friend, should we be importing £750,000 worth of white Italian marble every year? Why bring black-enamelled headstones into our country to desecrate our village churchyards? Surely our own stonemasons are fully equal to fashioning tombstones torn from our own native soil, in Scottish, Welsh or Cornish granite, in sandstones from Derbyshire, Yorkshire and Nottinghamshire, in slates from Cornwall and Westmorland, in limestones from Dorset, Somerset or the Pennine country.
A North of England monumental sculptor has written on this subject as follows:
British workmen have for generations made thousands of beautiful memorials in British stone and granite which will be in a good state of preservation when those of Italian marble have crumbled to dust. Let us bear that simple fact in mind, and profit by it. What can be more depressing to mourning relatives than to visit burial grounds where the eye meets row upon row of white marble headstones—one ghastly, unrelieved colour effect of bleached whiteness, for all the world like the silent ranks of a ghostly army in white shrouds.
Why does the Government allow our craftsmen to be put out of business and our own quarrying industry to be thus penalised?
Many of our great export industries actually stem from the traditional hand workers of Britain in silver, furniture, wood-carving, textiles and wrought iron. I would refer the House to the splendid example of choice wrought iron which exists in the Crypt Chapel, which is all too often ignored by visitors to that part of the Palace of Westminster. I suggest that the Government should help British handcraft export all they possibly can. We have a heritage which few indeed seem to realise today. My own constitu-


ency provides something of an exception to a general and deplorable rule. There is in Bedford, in the Pyghtle works, a wonderful craft centre with traditions and workmanship second to none. I hope that the next time Members of this House visit Westminster Abbey they will take the trouble to inspect the carved English walnut lectern presented to that church by the Baptist Missionary Society, and produced in the factory in my own constituency which I have named.
In other respects, too, Bedfordshire seems to be ahead of other areas. I told recently, in a debate in the House, of Bedford's tree-planting activities. Now, an Association of Master Thatchers has been formed, and a census taken and register of craftsmen drawn up. I suggest that my hon. Friend might well see his way to give encouragement tonight to those steps being followed in other counties. I feel that in all this, local authorities can do a lot more to help than they are doing. The trade unions, also, which have real experts among their members might encourage some of them, for instance those in the Amalgamated Society of Woodworkers, to volunteer to take evening classes which could be arranged in appropriate areas and centres. I would even advance the proposal that we might have, in this House, a Minister of Culture and the Arts. I wonder what my hon. Friend's reaction is to that suggestion.
The implications of this whole subject, in the light of our export position, should be obvious to everyone. I should like the Minister to say a few words about that aspect. Even in this rather depressing age of mass production and large-scale industry, when perhaps it is inevitable that the work of the individual craftsmen can be enjoyed only by the few, the individual craftsman can, I feel, still set the standard of design; he can still be the brains of the machine. He can, in very many cases, determine whether the machine-made article of ordinary commerce is choice in its pattern, and whether it is ugly or beautiful. He can thus be of key-importance in helping our country to face the competition of Sweden, Finland, and other European communities, and to maintain and, where necessary to get back to, the position in which we were once quite truthfully called a nation of shopkeepers.

11.24 p.m.

Mr. Keeling: I was a little surprised, Mr. Deputy-Speaker, that, you doubted the responsibility of the Government in this matter, because there has not only been more than one Act of Parliament recently which has deliberately set out to encourage craftsmen, but we have a statutory body, the Royal Fine Art Commission, which has the general duty, under the Government, of encouraging beautiful design. I want to devote my very brief remarks to one particular craft which is, perhaps, one of the most neglected and the most worthy of encouragement. That is the craft of the stonemason. It is very satisfactory that the Ministry of Works, in the light of the report on the. Recruitment of Masons, has recently issued a circular saying that it wishes it to be known that to secure an adequate force of stonemasons for the building industry, it has instructed its regional officers to license as freely as possible schemes involving the use of stone.
There is a good deal of evidence that the question of cost is not insuperable. There is a good deal of evidence that by the co-operation of the architect, the master quarryman and the contractor, stone houses in stone areas can be built at not much greater expense, or, indeed, any greater expense, than brick houses. Not only have we that circular, but also the Housing Bill, which has passed through this House and is now in another place, which provides special grants for stone building, in addition to the ordinary grant for other houses. Of course, it is very important that any encouragement given to a revival of the use of stone should not only provide employment for existing stonemasons, but should also create a demand for more stonemasons. It is not sufficient to employ only the stonemasons who may now be out of work, but it is necessary to encourage young men to enter the industry.
In the Cotswolds, and the West Riding, and other stone areas, there is an alternative to the actual use of stone in the ordinary sense of the word, which alternative is far more suitable than brick in such areas. I refer to the crushing of local stone, of which hon. Members can see a very good example on the Holland Martin estate at Overbury. Not far away


from Overbury one can see an example of what not to do in the lovely town of Chipping Campden, where the old houses look as though they belong to the ground on which they stand. But in Chipping Campden there is a remarkable example of the wrong thing, perpetrated by the North Cotswold Rural District Council. They have erected a group of houses in pink Fletton brick, and another group in red. If there is one place where red brick should not be used it is Chipping Campden; but that applies, more or less, to every other part of the stone country. I think that no worse injury can be done to the beauty of this country and to its attractiveness to foreign visitors than the indiscriminate use of red brick in stone areas.

11.27 p.m.

Mr. Rhodes: There are just one or two points I would make in support of my hon. Friend who raised this subject. He has done a service in bringing it forward. I would point out that, in the craftsmanship to which he has referred, he is talking of something which has a pastoral background. A lot of the craftsmanship which has come to us has been preserved on account of the manual dexterity handed down by the individual, even during the machine age. But the problem is where automatic machines are being installed throughout the length and breadth of the land in industry; there is a danger that the individual becomes an automaton, and it is that side of the subject that I have studied for some time.
I think we should take the attitude that inefficiency in our industries and mills is ugly for a start. If we can begin in our new factories, or in those being altered to suit modern needs, to understand that that is a primary condition, a lot of good will result. I have tried it in my own factory; I have tried to bring a realisation of the necessity for craftsmanship in the handling of woollen manufacture and I think we shall succeed. But in my opinion, it will have to be done through the removal of ugliness and we shall all have to start with a will at the present time to get rid of it.

11.30 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. John Edwards): My hon. Friend the Member for Bedford

(Mr. Skeffington-Lodge) has shown a consistent interest in British craftsmanship, and I should like to assure him at the outset that the Government share his concern and think it important to safeguard and encourage British handcraft. The skill and training of craftsmen are not lightly acquired and ought properly to be regarded as an extremely valuable national asset, and not least at the present time when all the missions that go overseas—and this is particularly true of those who go to North America—come back and say we really must pay closer attention and more care to problems of design.
I hold the view that the healthy basis of craft-work is an essential condition for the success of any measure that may be taken to improve the design of industrially-produced goods. Only yesterday I saw for myself in Manchester, in the School of Art, some of the work that was being done by the education committees of the country in the way of the training of craftsmen, and I was most impressed by the quality of the work I saw which had been done in this place. So, through the educational system, we want to do everything we can to help in maintaining high standards of craftsmanship both as a vocation and as an occupation for leisure.
Reference has been made to the Craft Centre. This centre was formed in 1948 to bring together in one organisation, the five existing major societies for the maintenance of craftsmanship. This centre, which has an indisputably national status, is planning to hold exhibitions, hoping to acquire premises, and is providing a common meeting ground for craftsmen from different trades. It was thought wise to use this organisation for the scheme which the Government introduced last October to give relief from Purchase Tax on furniture, textiles, and articles made of precious metals provided they were handmade and reached approved standards of design and craftsmanship. Although since the scheme has started, we have paid out in relief under the scheme only £6,274, we have nevertheless set on one side £75,000 in the present financial year for this purpose if it is needed.
Then there is the British Handcrafts Exports which was founded in July, 1948, to find markets overseas, especially in dollar-earning countries, for good quality hand-made articles of every kind. It is


at the present time interesting itself especially in the United States, Australia, and Switzerland. The first consignment of goods has already been shipped to the United States and a close survey has been carried out of that particular market. The United Kingdom Trade Mission in the States has given us frequent help with the survey and plans are now very well advanced for a selling organisation in the States which would be under the control of B.H.E. headquarters in London. I believe that what this organisation—British Handcrafts Exports—would be able to do, may not appear to be great in volume, but it would, I think, have very considerable influence. I have talked about the States. Actually, the organisation has already appointed an agent for Australia, and the first consignment of goods has left for Australia this week. Also this week, the first consignment went to Switzerland. The organisation is now taking steps to appoint a suitable agent in Canada.
Here in London there will in due course be showrooms and offices under the personal exports scheme by which the B.H.E. will sell to overseas visitors who happen to be here. All this work is going on. B.H.E. has already commissioned work from 100 craftsmen and has personal contacts with at least 200 more who are considered to come up to the standard required. On the question of getting known to craftsmen, B.H.E. is receiving the active assistance of regional export officers and the organisers who work in conjunction with the Rural Industries Bureau. I doubt whether it is necessary to have any census of craftsmen, because I think that both the Craft Centre and B.H.E. maintain lists of craftsmen which are constantly being added to and kept up to date. I think that as these two

organisations develop we shall get a comprehensive knowledge of the craftsmen throughout the country.
My hon. Friend was particularly worried about the imports of Italian marbles. I would point out to him that while it is true that the current Anglo-Italian Trade Agreement permits Italy to send £500,000 of rough marbles and £50,000 of worked marble to the United Kingdom during the current year, the imports on this scale are only 50 per cent. of pre-war quantities in the case of rough marble and less than 10 per cent. in the case of worked marble. And so, if this be an evil, it is not as great an evil as it was. In any case, I have to make it plain that we cannot possibly use import licensing restrictions for any other purpose at the present time than to safeguard the balance of payments, and that when we are negotiating with other countries for supplies of essential foodstuffs and raw materials, we must permit certain imports to come in which we may not require in any fundamental sense but on the sale of which the other people have to live.
I hope I have said enough to indicate the Government's full approval of many things which my hon. Friend has said. Perhaps I might be permitted to conclude by saying that what he said touched me rather nearly, because one of my grandparents was a stonemason in my hon. Friend's constituency. There are examples of his work still to be seen in many of the graveyards there, but what his view would be about Italian-worked marble I cannot even begin to think.

Question put, and agreed to.

Adjourned accordingly at Twenty-two Minutes to Twelve, o'Clock.